Posted On: April 30, 2016

You hear a lot about consumer proposals in Toronto nowadays. Since, in my experience, practically nobody wants to do a bankruptcy it’s no wonder that consumer proposals have become the most talked about part of the personal insolvency business. In fact almost half the people who deal with a Licensed Insolvency Trustee like Richard Killen & Associates do a consumer proposal instead of a bankruptcy. But how do they work?

A consumer proposal works the same as a consolidation loan. Instead of having to pay 10 different credit cards every month you consolidate everything into one monthly payment. Overall it is often cheaper and it certainly takes away the stress and frustration of dealing with a bunch of different payments every month.

With a consumer proposal however, you don’t have to borrow any money. Getting a loan might not be easy. The lender may want collateral, or a co-signor, or maybe your credit rating has deteriorated. With a consumer proposal you don’t have any of these problems. You can consolidate everything into one monthly payment simply be filing a consumer proposal through a Licensed Insolvency Trustee like Richard Killen & Associates. It must be done with a Licensed Insolvency Trustee.

A consumer proposal is a legal settlement offer you make to all your creditors -combined. Some people have the means to offer enough to pay their creditors the full amount they owe them. Others do not have those means, so they offer what they can afford. Usually the creditors accept a lesser amount if they see it is the best you can do.

The trick is to make sure you will be able to make the payment every month. A consumer proposal i s limited to a term of 60 months. Say you owe $30,000.00 in credit cards and you can’t keep up the combined monthly payments. You determine that, with the utmost budgeting, you can afford a maximum payment of $400 a month. OK, you make a consumer proposal offering
$400 for the full 60 month; which comes to $24,000. It isn’t 100% of what you owe, but it may be acceptable to your creditors. They will determine their own best interests, but they may decide to accept it if they think you are doing your best and they see it is generally the best they will likely get. No matter the reasons, you can find yourself paying off your creditors in a way you can afford.

A consumer proposal is not magic, but it is a bona fide alternative to a bankruptcy and like I said earlier, over the last few tears it is being used almost as frequently as a bankruptcy by people in debt trouble looking for a solution.

So if you want to find out if this is for you call or email Richard Killen & Associates for a FREE consultation. It may be the most stress-relieving call you ever make.

Richard Killen
Licensed Insolvency Trustee

Posted On: April 28, 2016

What is the difference between Bankruptcy and Consumer Proposal is a common question we hear all the time so today let’s do a comparison of consumer proposal vs bankruptcy.

I’ve been in the insolvency business discussing bankruptcy in Toronto for over 30 years and in all that time I don’t ever remember meeting anyone who wanted to actually go bankrupt. Let’s face it, who would? I have met an awful lot of people who did realize and accepted that bankruptcy was the solution they needed. But, going bankrupt had not been on their to-do list.

It is a common topic when choosing a debt relief solution. I know the vast majority of people who come to our office would greatly prefer to solve their debt problems in some way other than filing for bankruptcy. Many choose a consumer proposal or some other kind of debt consolidation versus personal bankruptcy. Ultimately, it boils down to finding out what options are available for you, what the consequences will be, and then deciding what is best for you and your family.

What is the difference between consumer proposal and bankruptcy?

A consumer proposal is a settlement made between you and the lender with the assistance of a Licensed Insolvency Trustee. The trustee will facilitate the negotiation between you and the creditor concerning the repayment terms. The agreement includes paying a reduced amount of your total debt owed within a certain period, usually five years. Once the agreement has been finalized, the creditors will not be able to take a portion of your income. Moreover, the interest on your debt will stop immediately.

On the other hand, bankruptcy involves taking over your assets to settle your debt with specific exemptions. Your Licensed Insolvency Trustee will work with you upon deciding to file bankruptcy, which is governed by the federal government. By declaring bankruptcy, your creditors can no longer go after you and you can have a fresh start in your financial goals upon relieving yourself from your debt. This is after completing your duties. However, no one wants to go bankrupt but depending on your financial struggles, this could also be the best solution to your debt problem.

Bankruptcy versus Consumer Proposal: How can you decide which best is for you?

A lot of things have to be considered when choosing between the two options. Do you want to keep most if not all your assets? If yes, you should consider going for a consumer proposal. There are also differences in the payment terms. A consumer proposal differs from bankruptcy in the sense that it requires a regular and fixed amount of payment based on what you agreed upon with your creditors. As with bankruptcy, you will be obligated to pay an amount based on your salary and other factors. A proposal will also have a lesser impact on your credit score but will still have an impact. Filing bankruptcy will make you debt-free faster than a consumer proposal.

The first step in making this work is to talk to a Licensed Insolvency Trustee. A trustee is licensed by the federal government with the duty to assess your situation for you and explain all the options and consequences. Once you know what paths are available and where they will lead, you can decide which one to take. Though the decision must be yours, their job is to make things as clear to you as possible so you can make the best choice for your financial situation.

Now here’s the neat part. That consultation with Richard Killen & Associates is FREE- no charge, no strings attached. Not a bad price for the kind of empowerment a person with debt problems wonders if she or he will ever find.

So don’t stew about those bills anymore. Call us or contact us by email and make an appointment for that free consultation. Remember, it may be the most stress-relieving call you ever make.

One of our Licensed Insolvency Trustees will explain the difference between bankruptcy and consumer proposal, and the pros and cons of each, however, ultimately, it’s up to you to decide on a bankruptcy vs consumer proposal to solve your debt problems.

Posted On: September 24, 2015

The major difference between a consumer proposal and a bankruptcy in Toronto is what happens to people’s assets, especially those who own their own home.

Even when faced with the likelihood of having to do a bankruptcy or a consumer proposal, most people who own their own place would prefer not to lose it. It’s fair to say that in a consumer proposal you only give up your assets if you want to. The thing is, in a consumer proposal you will be offering your creditors money, usually through a monthly payment plan, to compensate them in a better way than a bankruptcy. Your assets will remain “off the table”, so to speak.

For instance, if someone owns a house which has some equity in it, they may be well advised to offer their unsecured creditors a reasonable proposal so that they don’t risk losing their house by being sued by those unsecured creditors. Often a consumer proposal is the absolutely best way to ensure that you can keep your home.

Even when you have enough income to make your mortgage payments, if you can’t also keep your credit cards and other unsecured debt payments up to date, those creditors will eventually take legal action against you. If they are successful and get a judgment against you, they would be able to use that judgment to eventually seize your property in order get their money.

When you file a consumer proposal with Richard Killen & Associates, it will prevent that from happening. It will allow you to make a new deal with those unsecured creditors so that, even though it may not pay them back completely, it will work better for both the creditors and for you. And it will save your house.
What such a deal would consist of depends on a lot of different factors which we can’t enumerate here, but that’s what you go to Richard Killen & Associates for. Remember the consultation is absolutely free.

Richard Killen, CIRP

Posted On: September 8, 2015

Toronto Licensed Insolvency Trustee Richard Killen explains what a consumer proposal is

Posted On: December 3, 2014

So the consumer proposal that you’ve filed in Ontario will soon be presented to your creditors. You’ve worked with a Licensed Insolvency Trustee, such as Richard Killen & Associates, to come up with a reasonable payment plan for your debts They helped you fill out the necessary forms and filed them for you with the Official Receiver.

Protections are in place
As soon as the consumer proposal is filed a legal protection goes into place – automatically. This means that none of your creditors can start, or continue, any collection effort against either you, or your property. In other words, all your creditors must direct their attention to your proposal, through the trustee. (In a consumer proposal the trustee’s title becomes “administrator.”)

Like most things in the law, there is an exception to this general principle. In this case a secured creditor, like a mortgage holder, can enforce his security rights under his contract with you. So if you wanted to keep your house or car, you would have to keep up your payments, or the creditor would have the right to repossess it from you. So that creditor can’t be included in your proposal.

But, as far as regular, unsecured creditors, you don’t make any more payments towards those debts because they will get paid through your consumer proposal. There is no point in their continuing to write to you, call you, demand payments from you, put the account in collection, garnishee your wages and so on, because the proposal has taken over your obligations to them.

So you’ve filed. What happens next?
Once the proposal is filed, the administrator must tell your creditors about it. A copy is sent to all of them and they are invited to file a claim to let you know, within 45 days, whether they are in favour of your offer or not. If they are, which is what normally happens, then you’ve got a deal. If not, we will have to have a meeting with the creditors, where everything can be discussed and eventually voted on.

To be approved at a vote, all it takes is a simple majority. The creditors get one vote for every dollar you owe them. That means the larger creditors are more important than the little ones. To be accepted your proposal must get 50% plus one vote.

Wondering what your chances are that the creditors will accept the proposal?

Your chances are good
While we cannot guarantee that any proposal offer will be successful, the vast majority of these legally binding settlements that we negotiate are accepted. The trustees at Richard Killen & Associates take a lot of time and effort to understand your situation – including what level of payments you can afford  – and have a lot of experience in dealing with creditors. We generally know what they are likely to accept. In short, we listen to them and we listen to you, and then help you craft a compromise that both you and your creditors can live with.

Why not handle it yourself?
The big advantages of doing a consumer proposal instead of handling negotiations with creditors yourself are:

• The filing of the proposal takes away the creditors’ other options; they must come to the table.
• You don’t have to get everybody to agree. The majority rules.
• A proposal works with all your creditors collectively.
• You don’t have to pay 100% of the debt. You can reach a compromise amount.

If the creditors representing the majority of the dollar value of your debt vote to accept the proposal, then it will become legally binding on all the creditors (and you).

Initial rejection is not the end
Though it is not a great sign, a rejection of your proposal, along with a subsequent meeting, is just part of the process. It usually means the creditors want you to offer more money, but this amount is still under negotiation. You still have the opportunity to make a deal. The trustee will continue to work with both sides to come up with an acceptable compromise. Often by adding a few dollars to the monthly payments, or by extending the payment period by a few months, the creditors will be satisfied.

So, is a proposal better than bankruptcy?
That is a good question. We get asked it a lot.

Very few people want to go bankrupt. They do so because they have to. Doing a proposal avoids bankruptcy, but whether it is the right move depends on individual circumstances. Only you can really answer that question.

For the creditors, it usually boils down to how much money they will receive. Creditors are keenly aware that what’s been offered them is better than what they’d receive in a bankruptcy. They know that if they come back and ask for too much more money that they may make you believe that a bankruptcy is the better way to go. They don’t want that either.   

Whether a proposal or a bankruptcy is the right way for you, is something you need to discuss with the trustee. That’s what we at Richard Killen & Associates are here for. Call us.

And again, don’t worry too much. At the end of the day, most reasonable consumer proposals in Ontario are accepted.

Posted On: November 17, 2014

We’re often asked by people who consult us: “Whom do you work for, the creditors or me?” The answer is: neither and both. To do our job properly, we need to work with both parties.

To be clear, a bankruptcy trustee is an officer of the court. We are licensed by the the Superintendent of Bankruptcy to act in a fiduciary capacity for all the participants, whether in a bankruptcy or a proposal. Fancy words, but what it means is that we are there to protect the interests and legal rights of both the debtor and the creditors.

So while we don’t in fact work for you, we do work with you to ensure that you can find the best solution for your circumstances.

When we first get together, during a free consultation at Richard Killen & Associates, we will ensure that you understand all your options. The most important thing we can do here is explain what the probable consequences will be for each of the options available to you. Only a trustee can do this comprehensively and effectively – probably because the trustee is the one who will be doing the actual work involved.

If you decide things will go forward after the free consultation, we’ll do all the necessary paperwork to get things started. After that, we will work with you and your creditors to administer the process in a way that is fully compliant with the law, so that you – and the creditors – get the full protection of that law.

So, even though the trustee doesn’t actually represent you the same way a lawyer or other professional does, he provides you with the best protection the law can supply and ultimately gets you to the destination you were seeking when you made your decision in the first place. That’s a lot to pack into a free consultation, isn’t it? Call Richard Killen & Associates and find out more.

Posted On: October 9, 2014

Do you have a consumer proposal that you are struggling to pay and you are wondering “What happens if you default on a consumer proposal”? As a rule, it’s not good to default on any kind of debt.

A proposal for an individual – most commonly called a “consumer proposal” – is one of the two ways of addressing a severe debt issue under the Canadian Bankruptcy and Insolvency Act. The other, of course, is bankruptcy.

Using the services of a Licensed Insolvency Trustee, like Richard Killen & Associates, a consumer proposal is a deal that you strike with your creditors to pay back part or all of what you owe, according to your means, either through a lump-sum payment or, more likely, a series of monthly payments. As long as you make the required payments, your creditors can take no action against you.

Once all the payments are made, you are freed from the spectre of your debt.

However, what happens if you miss some of the payments agreed upon in the proposal?

Since the proposal is a legally binding agreement, this would be a serious situation. If you fail to meet the terms of your proposal, especially by missing three months of payments, the consumer proposal is annulled automatically. (You can miss up to two payments without triggering the consumer proposal annulment. The missing payments will be tacked to the end of your term.)

And what happens after a consumer proposal is annulled? Well, your creditors are free to once again start collections and/or take legal proceedings against you. And you may be faced with bankruptcy.

If you start falling behind in your proposal payments and you know that your shifting financial situation is going to make it hard to make them up, then you need to see your trustee and review your situation. You might be able to amend the proposal and solve the problem that way. You might have other options, but you’ll need to see the trustee. He or she can tell you what you need to know.

But fair warning: if you amend your consumer proposal, it will mean that your original one no longer applies. Your amended proposal will have to go through the creditor approval process again, and if your creditors refuse the amended version, you cannot just go back to the original terms.

This is why we at Richard Killen & Associates believe it is critical that we sit down with you at the beginning of the process and work out reasonable terms for a consumer proposal. That is the only way you can have peace of mind knowing that you are getting your financial life back on track – one payment at a time. If you are at the point where you are asking what happens if you default on a consumer proposal, it’s time to talk to a licensed trustee before you default.

Posted On: July 25, 2014

If you don’t live in Egypt, being in denial is a bad thing.

Most of us carry some form of debt, whether it’s a car loan or a credit card balance that we just can’t manage to pay off this month. But when does debt load become dangerous?

Well, one sign is when you don’t want to think about it and are kept up nights with stomach-twisting anxiety. The problem scares you so much you put your head in the sand and keep spending as usual.

If you think you have a problem, you probably do. But here are 10 more telling signs that you are sinking too far into a financial morass:

1. You frequently pay bills after their due date, incurring secondary notices and penalty charges.
2. Creditors are calling about unpaid bills.
3. You regularly bounce cheques and overdraw your bank accounts, causing you embarrassment and triggering bank penalties.
4. You use one credit card to pay the balance on the other, or use it to pay other bills or to buy necessities.
5. You pay only the minimum balance on credit card bills.
6. You’ve been denied credit because your debt ratio is too high, or need a co-signor for a loan because you are too much of a risk by yourself.
7. You hit up family and friends for loans to make ends meet.
8. You don’t know how much debt you’re really in, because you’re afraid to hear the number.
9. You hide purchases and debt problems from your family, or you fight a lot with your spouse over debt issues.
10. An unexpected expense, such as a car repair, sends you into panic mode.

Of course, just not thinking about money problems, or running way from them, doesn’t work. They always manage to find you. The best way to deal with them is head on, using the advice of a trusted expert. At Richard Killen & Associates, we can lead you through the appropriate responses to your particular situation, whether it is debt consolidation, a consumer proposal or bankruptcy.

Contact us for a free consultation – it will be the most stress-relieving call you will ever make.

Posted On: June 22, 2014

Hi. I’m Richard Killen from Richard Killen & Associates. Richard Killen has offices across the GTA. One of the most frequently asked questions I get as a Licensed Insolvency Trustee is, “If I go bankrupt or do a consumer proposal, will I lose my home?”

Well, probably not. Sounds evasive, doesn’t it? But it isn’t really. A bankruptcy or a consumer proposal is a legal process, so there are no guarantees. But my experience is if they want to most people keep their homes in a bankruptcy or proposal.

The problem is, people hear so many misleading things out there that they shy away from consulting a trustee like Richard Killen & Associates. They shouldn’t, because a trustee is the only one who can tell them what will happen in their specific case.

So call Richard Killen & Associates today for a free consultation at our office nearest you, 888-545-5365, or visit us online at killen.ca. It may be the most stress-relieving call you ever make.

Posted On: June 16, 2014

People often ask, what is a consumer proposal what is the consumer proposal meaning or definition and how similar is it to a debt consolidation loan? A proposal is like a consolidation loan where your payments are made affordable and downgraded into a single monthly payment term. You can make the payments to a trustee who accumulates them and pays the money out to your creditors every six months.

Consumer Proposal Meaning & Consumer Proposal Definition

A proposal is a debt settlement agreement that you can do with a Licensed Insolvency Trustee.

The thing about it is that it does not necessarily involve paying back 100 percent of what is owed to the creditors. Many times the total amount owed can be reduced by 50% or more. It involves making a new deal with creditors so that they get paid to the best of your ability.

The major difference between an informal arrangement with creditors and a proposal is that the latter has the protections that are built into the law. You are protected by the law until it is determined that the creditors will or will not accept your proposal. They still have the option of turning you down but no one can take legal action against you. However, if you are under an informal agreement, the creditor who does not approve with the arrangement can still sue you, garnishee your pay and seize your assets.

What happens in the proposal?

A consumer proposal can be a solution to avoid bankruptcy if you are having difficulties with your debt payments. Your trustee will review your situation with you and help you determine the best payment term for your financial problem. The settlement will depend on your income and personal assets. The term can cover an interest-free payment of up to 5 years which can lead to bigger savings. A consumer credit proposal can work with various unsecured debts such as bank loans, tax debt, and credit card debts as well as student loan debt.

How will you know that you are eligible for a consumer proposal?

First of all, you need to make sure that you can make payments for a portion of your debts. Secondly, your assets must be of lesser value than your debt which shows the reason why you are not able to keep up with the payments. You must also be a resident of Canada to qualify. Take note that a proposal is regulated by the federal government and you must comply with all of the requirements.

What are the benefits of Consumer Proposals?

Aside from being able to avoid bankruptcy, it can help you save money by reducing your debt by a significant amount and by stopping the interest rates. This way, you can keep your properties. You also do not have to make multiple payments—this will combine your debt into a single monthly payment. Besides, your creditors will have to follow your terms and stop wage garnishments. This is instant protection from the creditors and collection agencies who must stop chasing you for payment.

A CP can be the most effective solution for your financial situation. Legal consumer proposal services can only be provided by a Licensed Insolvency Trustee or a licensed consumer proposal administrator. They will help you understand your debt relief options and help you manage your debt problems. You can book a free consultation with a trustee.

Now that we have answered the question “What Is a consumer proposal?”, you now have a much better understanding of the consumer proposal meaning where you pay only a portion of the debt owed with no interest versus a debt consolidation loan where you pay back 100% of the debt owed, plus interest.