You just received your paycheque and your bills are due. You have a good job, but it never seems like you have enough money to go around. You can make some payments, but not as much as your creditors want.
If this is the constant struggle you find yourself in month after month, and it is wearing you down, you might want to seek debt relief through a negotiated settlement with your creditors by filing a Consumer Proposal. A Consumer Proposal allows you to pay a reduced portion of your debt, eliminate the interest you need to pay, and it still allows you to maintain control over your assets and your life.
We offer FREE INITIAL CONSULTATIONS, with trusted, experienced professionals who are friendly and easy to talk to.
CONSUMER PROPOSAL GENERALLY
A Consumer Proposal (also referred to as a Personal Proposal, or just a Proposal) to your creditors is a legally binding debt settlement alternative that is administered through the Courts by a licensed insolvency trustee or proposal administrator who summarizes your financial circumstances, prepares a report and submits a settlement proposal to your creditors on your behalf.
In order to be eligible for a Consumer Proposal, a person’s debt cannot exceed $250,000.00, they must have the ability to repay a portion of their debt, and are looking for an alternative to bankruptcy which will allow them to resolve their financial affairs.
A CONSUMER PROPOSAL MAY BE A VIABLE SOLUTION IF:
- You have debts over $10,000, but not over $250,000 (not including your home mortgage);
- You’ve got a good job, and can afford to make some payments each month;
- You just cannot afford to repay everyone in full with interest;
- You can’t get a debt consolidation loan because you have been told your debts are too high,
or you don’t qualify; - With your income, you will have to make significant income payments in your bankruptcy;
- You don’t want to lose or have to surrender any of your assets, such as a valuable home or car.
THE 5 MAIN BENEFITS OF A CONSUMER PROPOSAL:
- You pay a reduced portion of your debts, with a maximum repayment term of
5 years or 60 months; - Interest stops accumulating from the date you file;
- Most wage garnishments and lawsuits cease immediately;
- Collection companies and creditors can no longer contact you for payment — It’s the law!
- You are not in jeopardy of losing your house or other assets, as in bankruptcy.
ADVANTAGES FOR YOU
If a Consumer Proposal is a viable option for you, it can be beneficial in the following ways:
1) More Time to Pay
During a bankruptcy, the amount you earn each month is compared to an income guideline chart set by the federal government. Individuals who earn more than the income guideline set out in the chart, are considered to have “surplus” earnings and are expected to contribute half of that surplus to their bankruptcy estate each month throughout their period of bankruptcy. Essentially, the more you make while bankrupt, the more you will need to pay. Sometimes the amount you have to pay over the shorter period of bankruptcy puts a severe strain on your budget, especially if you have a lot of fixed expenses.
A Consumer Proposal gives you more time to pay this amount, and as a proposal is based on your income level at the start of the proposal all improvements in your earnings or finances during the term of your proposal will belong to you. In other words, you get to keep all the upside and your agreed upon proposal payments do not go up, even if you earn more in the months or years to come.
2) Lesser Impact on Your Credit Rating
The effect on your credit rating is generally less than a bankruptcy. Consumer Proposals usually results in an R7 rating, whereas a personal bankruptcy will produce an R9. An R9 is the lowest rating, and you should investigate all other options prior to choosing to file for bankruptcy.
3) Control Over Your Affairs
If you file a Consumer Proposal, you have the opportunity to repay a reduced portion of your debt and make a single payment each month. The ability to regain control over your affairs can bring a dramatic improvement in self esteem.
ADVANTAGES FOR YOUR CREDITORS
Why would your creditors accept a Consumer Proposal and accept less than the full amount they are owed?
Most creditors don’t want you to go bankrupt, and a consumer proposal will allow them to recover more than they would in a bankruptcy.
WHAT A CONSUMER PROPOSAL WON’T DO FOR YOU
A consumer proposal will not:
- Allow you to pick and choose the debts to be included;
- Eliminate child support or alimony obligations;
- Eliminate student loan obligations unless you have been out of school more than seven years;
- Help you deal with secured debts, such as your house mortgage or car loan unless you are prepared to surrender those assets. Your trustee can advise how to deal with these.
The team of debt professionals at Cameron-Okolita Inc. have considerable experience in administering Consumer Proposals, and more than 90% of the Consumer Proposals we submit on behalf of our Alberta clients have been approved by creditors as submitted without change.
If you can’t pay your bills and don’t want to go bankrupt, this may be your best alternative and when we meet with you we will review all your options and explain the advantages and disadvantages of each. Our FOCUS is on helping you find the BEST DEBT RELIEF SOLUTION for you and / or your family.
