Possible Solutions

 

Many people are hesitant to seek advice because they worry about what they may be told. Our best advice is to seek help at the first signs of trouble. By asking questions early, you keep your options open and can avoid bankruptcy.

Are you using or considering using “alternative consumer credit” options such as payday loans and debt consolidation loans, or mortgage refinancing to resolve your debt problems? While these options may help you stay afloat, they aren’t solutions, rather just more debt with high fees and very high interest rates. We have found that while many people choose these options to avoid bankruptcy, in fact these options can actually work against them.

There are many options available to help you get out of debt, Consumer Proposal is one of them:

What is a Consumer Proposal?
A consumer proposal is a legal procedure available to people living in Canada who are experiencing financial difficulties, but can still afford to repay a portion of their debts. It’s not for everyone – it is only for people who are already in financial trouble. In order to file a consumer proposal, you have to prove that you are insolvent– if you are not insolvent, you are not eligible to file a consumer proposal.
We will meet with you and work out a payment plan. If you qualify, you can get rid of upto 75% of your debts. If your proposal is accepted,

• Interest will be frozen at the date you file;
• You will be making only one small monthly payment.
• Your creditors can not take any legal action against you; and
• Wage garnishments (except for support and alimony) are immediately stopped.

For example:
The following example shows how your monthly payments would look like if you were to repay your debt through consumer proposal vs. other options. These monthly payment calculations in the example are based on a total unsecured debt of $25,000 and a 5-year pay-back period at 18% annual interest rate.

A Consumer Proposal is suitable for you 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 your debts are too high, even with your steady job.
• You don’t want to go bankrupt, because:
• With your income, you would be subject to surplus income penalties.
• You don’t want to lose any of your assets, such as a valuable home or car.

Why would your creditors accept a consumer proposal where they are getting less than the full amount they are owed?
In most cases they don’t want you to go bankrupt. A proposal is better for them because even though they may not get all of their money, they are getting more than they would get in a bankruptcy.

Repay “a portion of my debts” - it sounds too good to be true!

It is true, but remember, a consumer proposal is an alternative to filing Bankruptcy. It’s not for everyone – it is only for people who are already in financial trouble. In order to file a consumer proposal, you have to prove that you are insolvent– if you are not insolvent, you are not eligible to file a consumer proposal.

So, what does “a portion of their debts” mean? Exactly what it sounds like - When you file a consumer proposal you offer to repay part of what you owe.

I never heard of a consumer proposal!
Don’t be surprised if you’ve never heard of consumer proposals before visiting this website. Historically, for every seven bankruptcies that are filed in Canada, only one consumer proposal has been filed, but those numbers are changing. More people are becoming aware of this option and deciding that it makes sense for them.

It is unlikely that the day will come when people no longer file personal bankruptcy, but consumer proposals provide a useful alternative to many people experiencing financial difficulties.

Can't I just leave a creditor out of the consumer proposal?
No. If you file a proposal to creditors, you are required to include all of your unsecured creditors. That goes for family and friends too. All of your unsecured creditors must be treated the same - it's one of the basic conditions of filing a consumer proposal.

Bankruptcy
If you and your Credit Counsellor have looked at all of the other options and found none that fit your situation, you may need to file for personal bankruptcy. Bankruptcy is a legal process that stops all collection action by most creditors and can help relieve you of your debts.
Bankruptcy can give you a fresh financial start.