Who can File a Consumer Proposal

June 8, 2013

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Who can File a  Consumer Proposal?

If you are one of the many Canadians who finds yourself in financial difficulties, a consumer proposal can be a useful tool

to get you back on your feet and debt-free.

In this second of a ten-part series, we look at the basic requirements for making a proposal, which are really very simple:

  • You must be unable to make all of your monthly payments to your creditors. If you are currently paying only some of your creditors every month, you may be in a position to make a proposal.
  • Alternatively, if you’re managing to make all your payments but only the minimum amount, chances are that the money is going to pay interest charges without reducing the actual amount you owe. This situation means you’ll make no progress toward getting out of debt, and may also qualify you to make a consumer proposal.
  • Your total debts, not including a mortgage on your home, must be less than $250,000. If you and your spouse or partner are both filing consumer proposals, your combined debts, not including a mortgage on your home, must be less than $500,000**.
  • You must be able to offer some form of payment to your creditors. This can be through a payment plan, proceeds from the sale of an asset, or even a lump sum (from an inheritance, relative’s assistance, or other means). If you choose a payment plan, you’ll need to have a stable income so you can meet that obligation.
  • You must be an individual — as in an actual person. Businesses cannot file consumer proposals (there’s a whole other processfor them).
  • You must use a licensed insolvency trustee for the proposal process. A proposal is a legally binding contract between you and your creditors—which is a good thing, because it means your creditors can’t change their minds as long as you’re meeting the terms—and it can only be filed by a licensed trustee.

That last point brings us to a word of caution: if you need debt help, make sure you’re getting the right kind. Many companies currently offer “debt solutions” or “debt settlement” services to unwary—and financially desperate—consumers. You need to know that they are not the same as a licensed trustee, and the “arrangements” they make with your creditors are not legally binding. We’ve lost count of the number of clients who have come to us after months of paying for such services, usually in worse financial shape than they were when they began.

Bottom line? Be smart, do your homework, and make informed decisions. A debt- and stress-free future can be yours if you go about it the right way.

If you think filing a consumer proposal might be an option for you, call us today for a free, no-obligation consultation. One of our debt counsellors will be happy to answer your questions and help you choose the right solution for you.

**If you owe more than $250,000 to your creditors (again, not including a mortgage on your home), you can file a Division I proposal.

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