Submitting a Consumer Proposal in Ottawa Ontario

Guide to Filing a Consumer Proposal In Ottawa Ontario

First, you need to know what a consumer proposal is. A Consumer Proposal is a formal, legally binding process that is administered by a Licensed Insolvency Trustee (LIT). Here is our guide to filing a consumer proposal in Ottawa Ontario. We have put these steps in order so that you can understand the process better.

1. The first thing you need to do is contact your local Licensed Insolvency Trustee or L.I.T., most of us know them as “bankruptcy trustees”. He or she will be able to assess your situation and tell you if a consumer proposal is a right way for you to proceed.

2. If it is determined that filing a consumer proposal is a wise way forward your trustee will create a proposal to submit to your unsecured creditors.

3. You have responsibilities when filing a consumer proposal. They are the following:

(a) You must give the LIT a complete list of all of your assets (property) and liabilities.
(b) You must attend the first meeting of creditors if a meeting is requested.
(c) You are required to attend two counselling sessions.
(d) You must advise the LIT in writing of any address change.
(e) Assist the LIT in administering the proposal as required.

4. By filing your consumer proposal, none of your unsecured creditors can take legal action against you like wage garnishment & collection calls, etc. Any legal action must stop.

5. The proposal will either be accepted or rejected within 45 days.
If creditors holding more than 50% of the Dept agree to the proposal your proposal will be accepted.

6. If creditors holding more than 50% of the debt reject the proposal you can either rework the proposal to meet their conditions or file for personal bankruptcy.

7. If your proposal is accepted you are required to do the following:

If your consumer proposal is accepted you are responsible for paying either a lump sum or periodic payments to the LIT.

a. Also you must adhere to any other conditions in the proposal.
b. You are required to attend two financial counselling sessions.
c. Once the repayment details have been approved you make all payments to the LIT and he or she will pass it along to the creditors.

Once you have completed these payments and fulfilled all duties associated with your consumer proposal, you will receive a Certificate of Full Performance signed by your trustee. Here is a link to the government information concerning consumer proposals.

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Is filing a Consumer Proposal A Good Debt Solution?

Finding the right debt solution, just like everything else in life, has its own advantages and disadvantages to filing a Consumer Proposal. Speaking with a debt solution specialist is ultimately is what you are going to have to do. Having said that let’s look at some of the advantages of filing a consumer proposal first.

Advantages of a Consumer Proposal

1. Manageable Debt Repayment

The consumer proposal includes what you can afford to pay your unsecured creditors, the remaining outstanding debt is eliminated.

2. Not All Your Creditors Have to Agree to Your Proposal.

If creditors holding more than 50% of the outstanding debt agree to the terms of the proposal, then all unsecured creditors are bound by the proposal. So that’s good.

3. You get Legal Protection From Your Unsecured Creditors

By filing your consumer proposal,none of your unsecured creditors can take legal action against you like wage garnishment & collection calls, etc. Any legal action must stop.

4. Your Licensed Insolvency Trustee Handles all the Communication with Your Creditors

The trustee will put together the proposal and look after all the communication with your creditors so you don’t have to. This is a relief to most people considering a consumer proposal.

5. You Get to Keep What’s Yours

You are able to keep all of your assets when you file a consumer proposal. You don’t have to worry about selling all your stuff! nothing will be sold to pay your creditors.

6. If You Start Making More Money You Don’t Have to Pay More

Once your consumer proposal is accepted by your creditors, the amount you have to pay back is fixed even if you start making more money later on.

7. Interest and Penalties on Stop

Note: All future interest and penalties stop accumulating upon the filing of your Proposal.

Disadvantages of Filing a Consumer Proposal

Now that you are familiar with the advantages of filing a proposal, here are some of the disadvantages you may want to consider.

1. Your Credit Rating Will Be Affected Negatively

Consumer Proposals are recorded and become a part of your Credit Report. This is a good news-bad news scenario in that if you are behind on your payments anyway, so you probably already have a poor credit score. If this in fact is not the case your score will suffer.

2. Only Unsecured Debts Can be Included in the Proposal

What does this mean? First, you have to understand the difference between secured and unsecured debt.

A secured debt is a debt backed or secured by collateral to reduce the risk associated with lending. A good example would be a home mortgage. If the borrower defaults on repayment, the lender can seize the house and sell it using the proceeds to pay back the debt.

An example of unsecured debt would be a credit card. Money borrowed from the card company is unsecured because they trust you will pay back the debt without having to put up any collateral.

3. Student Loan Have to Qualify to be Part of a Consumer Proposal

Student loans can be included in a consumer proposal, and are eligible for release if they meet the seven-year rule. … As long as your student loan lender files a claim in your consumer proposal, they will receive their pro-rata share of the consumer proposal payments you make, like any other unsecured creditor.

The Seven Year Rule Explained

In plain English, the seven-year rule says that in order for you to be released from your student loan you must have been out of school for at least 7 years. If you have been out of school for seven (7) or more years and then file a bankruptcy or a consumer proposal, then the loan is a normal unsecured creditor and can be cleared by the bankruptcy or proposal. If you go back to school, even part-time, seven years starts all over again.

4. A Consumer Proposal Takes Longer than Bankruptcy

Not: As a general rule it does take longer to complete a consumer proposal than a bankruptcy.

Setting Repayment Terms of a Consumer Proposal

The recommended time period for repayment is a maximum of 60 months. There are a couple of reasons for this. The first one is that the longer the time period the smaller the monthly repayment will be. Secondly, if you offer to pay it off in a shorter period of time the creditors will reason that you can pay the same monthly amount over a longer period of time.

Everyone’s financial situation is different but if you are struggling to meet your financial obligation it’s wise to speak with an Ottawa Licensed Insolvency Trustee here at Lazard & Associates and get all your questions answered. The call is free and held in the strictest confidence.

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Consumer proposals – How are payments to creditors made?

All Payments, under the consumer proposal, are made through the LIT, which uses that money to pay each of your creditors. We would distribute the payments directly to your creditors.

Is a Consumer proposal right for you?

To find out if a consumer proposal is a right decision for you, make your free call to Ottawa Licensed Insolvency Trustee Jean Lazard today or fill out the form on this page and Jean will get back to you.
Please note that we also provide Bankruptcy & Consumer Proposal services in Cornwall, Kingston, Brockville, and Hawkesbury Ontario.
Here are some 2020 Bankruptcy & Consumer proposal Statistics for Ontario, Quebec, BC, and Alberta. Here is a link to complete statistics.

Video about Submitting a Consumer proposal in Ottawa

In this video, an Ottawa Licensed Insolvency Trustee explains to Mary and Paul that a consumer proposal might be the way to resolve their financial situation. The trustee tells them how a consumer proposal is different from bankruptcy and what they need to do.

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Here are some 2020 Bankruptcy & Consumer proposal Statistics for Ontario, Quebec, BC and Alberta.

Here is a link to complete statistics.