Consumer proposal how does it work

However, if your proposal is rejected, you must look at other debt help options, which might include declaring bankruptcy. Your unsecured debts are included in a consumer proposal.

Unsecured debt unlike a mortgage that is secured by a house or a car loan secured by a car can be included in a consumer proposal. Types of unsecured debts include but are not limited to :. Normally, secured creditors are not affected by a consumer proposal. In most instances, you will continue to make payments to the secured creditors as per your usual arrangements. However, in your consumer proposal, you may choose to surrender and return your secured assets, such as a vehicle or house, to the lender and stop making payments for these assets.

In these circumstances, depending on provincial laws , the sale of assets held by the secured creditor will be included in your consumer proposal. This means you will not be responsible for any further payments to the secured creditors. When you file a consumer proposal, all your assets are protected from your unsecured creditors.

If you own a home or a car you will need to make payments on your mortgage or car loan in order to keep them, as these debts are not settled in a consumer proposal. Consumer proposals commonly offer unsecured creditors settlement of debts by way of monthly payments, not by way of surrendering assets. This means that individuals normally keep all their assets when they file a consumer proposal.

By law, collection actions against you must cease once your consumer proposal has been filed. A consumer proposal provides a Stay of Proceedings, which means that by law your creditors can no longer contact you for payment.

All collection action against you must cease once official consumer proposal documents are filed. Consumer proposals trigger a freeze on your debts and stop interest charges, collection calls and letters, wage seizures, and bank freezes. If you have a mortgage or vehicle loan that you are opting to continue with, you must continue to make the required monthly payments and you will continue to be the contact person with your creditors about these.

If you have joint debts then it may be appropriate to file a joint consumer proposal as the non-filing partner will still be liable for the joint debts.

If you can do so, and while the trustee may agree to reinstate the proposal, they will still need to get the agreement of your creditors to reinstate it. If the day window has already passed, then you can go before the court to ask them to revive the proposal. If the court agrees, then it may be reinstated. The fees for your proposal are included in the monthly payments you make on the proposal. A consumer proposal is automatically annulled if you miss three monthly payments or miss one payment by more than three months if you are not on a monthly payment schedule.

When this occurs, the terms of the agreement are no longer in effect. This means interest rates and penalties on your debts can be reinstated. Creditors can begin collection actions again and have the right to sue for your debts. If a wage garnishment was in place before the filing of your proposal, it can start again as well. You may be able to reinstate your consumer proposal, but if that fails you would not be able to file a new consumer proposal for the same debts.

You would either need to file for bankruptcy or find another solution to pay off your debts. If you are on a monthly payment schedule, then the Bankruptcy and Insolvency Act BIA stipulates that you can miss or defer two payments during a consumer proposal.

You should still contact your Licensed Insolvency Trustee to let them know you are having trouble. However, if you miss three payments then your consumer proposal is automatically annulled. If you are on a non-monthly payment schedule, the proposal is annulled if a single payment is missed by more than three months. All payments made to that point will still be credited to your accounts.

However, you will not get a refund of any fees you paid. And if you wish to continue and complete the proposal, you will need to go through the process to have it reinstated. This only happens if creditors holding a majority of your valid debt claims reject the proposal.

First, a meeting of creditors will be called by your Licensed Insolvency Trustee. This would give you and the trustee the opportunity to make your case and renegotiate, if necessary. You may be able to either extend the term of your proposal or adjust the payment schedule.

If the majority still votes to reject, then you have a few options:. Consolidated Credit has helped more than , Canadians in 14 years find relief from debt. A Trained Credit Counsellor will be calling you at the number you provided. If you qualify to enroll in a debt management program, your counsellor can also help you enroll immediately. Skip to content Home » Consumer Proposal. Consumer Proposal Guide Using a Consumer Proposal to Settle Your Debt When you cannot afford to repay all your debt, a consumer proposal offers a legal way to settle for less than you owe.

Table of Contents. Can I amend a consumer proposal? Can I file a second or third consumer proposal? Can I get an annulled consumer reinstated?

How are consumer proposal fees paid? What happens if a consumer proposal is annulled? What happens if my consumer proposal is rejected? If the majority still votes to reject, then you have a few options: Withdraw the proposal and find a different option for debt relief, such as going through credit counselling. Work with your trustee to file for bankruptcy. Withdraw your proposal and file it at a later date. Thank you for your application! For immediate assistance, please call: Debt Amount.

First Name. Last Name. Email Address. Phone Number. Just like with other debt consolidation options , a consumer proposal is a good fit for some people, but not for everyone. It depends on a number of things including if someone is working, the type of debts they have, how much they owe and their overall financial situation. To help you figure out if filling a consumer proposal is the best option for you, contact us to find out about all of your debt consolidation options.

One of our counsellors will be happy to look over your whole financial situation carefully and answer your questions. Speaking with our certified Counsellors is always free, confidential and without obligation. Are you curious about what credit counselling is or how it works? We Help. We Educate. We Give Hope. Client Login We Help. Search for: Search Button. Consumer Proposals. Learn how consumer proposals work, the long-term consequences, and what debts can be included.

Debt Help. Locations We Serve in Canada. British Columbia. Beware the Big Debt Rip-Off Consumer proposals have become the latest method for a growing number of for-profit companies and their sales people to take advantage of vulnerable, unsuspecting consumers.

Talk With a Non-Profit Credit Counsellor Speak with a non-profit credit counsellor about your financial situation first. Only Pay a Trustee for Consumer Proposal Services Never pay money to anyone for consumer proposals services except a licensed bankruptcy trustee.

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