Consumer Proposal – Ontario

What is a Consumer Proposal?

A consumer proposal is a legal process that provides a debtor with a simplified streamlined method to settle their debts with creditors without filing an assignment in bankruptcy. The proposal can be tailored to suit your present financial situation, whether it’s extended payments terms or a percentage of the total debt to be paid in monthly payments or in a lump sum.

Consumer proposals are intended to help reduce the number of bankruptcy filings by allowing debtors who owe less than $250,000 (excluding a mortgage on their principal residence) to negotiate with their creditors for the reduction of their debt and/or the extension of time for repayment.

As long as the consumer proposal offers more to your creditors than they would receive in a bankruptcy and your trustee is satisfied you can fulfill the terms, this may be a viable option for you to avoid bankruptcy.

Consumer proposals offer debtor rehabilitation while at the same time providing financial protection.

Who can make a Consumer Proposal?

A natural person who is bankrupt or insolvent and whose aggregate debts, excluding any debts secured by the person’s principal residence, do not exceed $250,000.00.

What are the Benefits of a Consumer Proposal?

A consumer proposal has many featured benefits:

  • Stops creditors from taking any legal action
  • Stops wage garnishments
  • Stops interest from accruing at the date you file a consumer proposal
  • Offers one manageable and affordable monthly payment
  • Extension of time for repayment and/or the reduction of debt you owe
  • Protects your assets
  • Allows you to avoid bankruptcy

Another benefit of debt settlement Ontario debtors will have is this: a consumer proposal generally has less of an impact on your credit score than a bankruptcy. A consumer proposal in Ontario typically produces an R7 rating while filing an assignment in bankruptcy will produce an R9 which is the lowest rating.

Be Free from Debt

A consumer proposal in Ontario is a negotiated settlement made between you and your creditors that is legally binding. The terms of the consumer proposal that debtors most often get is one where you make one monthly payment over a period of no more than 5 years. This is one form of debt consolidation Ontario consumers can take advantage of which doesn’t require borrowing more money.

The funds are then distributed among your creditors by a proposal administrator, who in Ontario is a licensed Trustee in Bankruptcy. Once you have made the final payment, you will be free of all of your unsecured debt. Many times, with the kind of consumer proposal Ontario consumers are usually offered, you will end up paying less than the full amount owed, and the interest on the debt stops as soon as you start the settlement process. Contact us online today!

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