Consumer Proposal – Wendy’s Story
My name is Wendy. I filed a Consumer Proposal in 2009, and successfully completed it in 2013. Since then, I have repaired my credit score and I’ve made every effort to spread the word about Consumer Proposals. It worked well for me. It may be an option for you, too!
How Did I Become Insolvent?
I am a typical Canadian consumer living in a medium-sized home near a small city; I earn a wage, and a little extra from a home-based business.
I didn’t live below the poverty line. I didn’t make expensive, luxury purchases. I didn’t gamble. But I did spend beyond my means – as it turned out.
I had used credit cards years before to help finance my business start-up. The balances on the cards stayed high over the ensuing years, partly because of high interest rates. I always made my payments, and paid extra when I could. However, the unexpected happened: the recession developed, and my income decreased. Suddenly, it became impossible to keep up with monthly bills.
What Is A Consumer Proposal?
A Consumer Proposal is a Bankruptcy alternative, ideal for those with an income, who can afford to make regular payments. Payments are typically made towards a Consumer Proposal for a period of up to five years.
Are You a Good Candidate for Consumer Proposal?
Ask yourself these questions:
1. Am I insolvent?
You are insolvent if you can’t meet your regular financial obligations.
2. Do I make a significant, regular income?
This is important. With a regular income, you may be able to make monthly payments towards a Consumer Proposal.
3. Do I prefer paying my creditors a larger percentage of what I owe them, versus filing for Bankruptcy and paying less?
Many debtors feel guilt over not being able to meet their obligations as agreed. A Consumer Proposal offers a practical way to pay as much as possible.
How Does It Work?
Make a free appointment to meet with a Licensed Insolvency Trustee, and bring along your monthly income and expense numbers (estimates will do at first). The Trustee will have a look and give you a preliminary outline of debt alternatives.
If you choose to work with the Trustee, it may take another appointment or two to review the information you provide, and draft the Proposal. The Trustee will work with you to determine what you can afford to pay per month.
When the Proposal is complete, the Trustee files it with Canada’s Office of the Superintendent of Bankruptcy, and sends copies to your creditors. The creditors have 45 days to vote on the Proposal. If the majority of your creditors (pro-rated by the dollars they are owed) vote yes, or do not vote, your Proposal is deemed accepted. The vast majority of Consumer Proposals are accepted.
Why Do Creditors Accept Consumer Proposals?
Consider this question: if you have regular income, can you pay more in 21 months (typical Bankruptcy term), or in up to 60 months? The bottom line is – the creditors get more money if you file a Consumer Proposal than if you filed for Bankruptcy.
Advantages of Consumer Proposal
Canada’s Bankruptcy and Insolvency Act sets down the laws pertaining to both Bankruptcy and Consumer Proposal.
As soon as your Consumer Proposal is filed, your creditors must stop contacting you. Harassing phone calls will cease. Legal action regarding your debts will be stayed. The calculation of interest also stops upon filing.
Once you have completed your Proposal (paid the full amount), your obligation to your creditors is satisfied. They are prohibited from approaching you for any additional payments.
Unlike in a Bankruptcy, your Trustee does not become the receiver of your assets. You retain control over your personal finances.
If your income rises during the course of your Consumer Proposal, your payments nevertheless remain the same. You have the opportunity to save money – and even to pay off your Proposal early.
And finally, a Consumer Proposal bonus: it is not Bankruptcy. Thus, you may lawfully answer “no” to the question, “Have you ever declared Bankruptcy [or been Bankrupt].”
Specifics vary by individual – but consumer insolvency is always unexpected.
Don’t Waste Time Worrying! Information is Power
The worst part, for me, was the worrying I did before I booked my appointment with a Trustee. The easy part began in the Trustee’s office. He and I were able to chart the course ahead, and I felt much better.
If you can’t pay your monthly bills, don’t delay as I did: browse the information on this website, and make an appointment to see a Licensed Insolvency Trustee or Consumer Proposal Administrator. Information is power – and it eases worry. Free Assessments are available in our Chilliwack, Abbotsford and Hope offices.[/list] [/column_1] [/column]