Consumer Proposal Toronto – Top Choice to Reduce Debt

Recent statistics from the Office of the Superintendent of Bankruptcy indicate that many people are choosing to file a Consumer Proposal in Ontario instead of bankruptcy protection as a way to find relief from a large sum of debt. When we take a look at data comparison from the Office of the Superintendent of Bankruptcy website for total insolvencies within a 12-month period over the latest 3 months, we’ll see the following:

For period ending
December 31, 2019

Consumer Bankruptcies

1.2% ↓

Consumer Proposals

17.9% ↑

consumer bankruptcies decreased by 1.2%, while consumer proposals increased by 17.9%.

For period ending
January 31, 2020

Consumer Bankruptcies

1.7% ↓

Consumer Proposals

18.7% ↑

bankruptcies bankruptcies decreased by 1.7%, while consumer proposals increased by 18.7%.

For period ending
February 29, 2020

Consumer Bankruptcies

1.7% ↓

Consumer Proposals

19% ↑

bankruptcies bankruptcies decreased by 1.7%, while consumer proposals increased by 19%.

This peak in the number of Consumer Proposal filings may be attributed to improved economic conditions worldwide, however, the OSB reports that it may also be largely due to the fact that consumer education has allowed many debtors to make a more well-informed decision as to which debt relief option is best for them.

Filing a Consumer Proposal in Toronto is indeed a popular option for consumers to consolidate their debts and pay their way out of debt. Many choose it over a bankruptcy particularly because it provides them the advantage of being able to pay back a portion of what they owe without losing their assets and for its less severe impact on their professional and social standing on the whole. But while it is one of the top insolvency options available in Canada, is it the right debt solution for you?

Let's Talk About Consumer Proposals Again

Is a Consumer Proposal Your Best Option – We Will Help You Find Out

There is a lot of information surrounding Consumer Proposals online and many individuals are left unclear on some questions.  How badly will it affect your credit report?  Will it clear out all my debts? How is it better than other debt relief solutions?

The good news is that you don’t have to figure things out on your own, Richard Killen & Associates is here to help you understand what the whole process entails. We can clarify any information that is unclear to you and dispel any false ideas and doubts you may have and make sure you’ll be getting the information you need to find the right solution for yourself.

During your initial consultation, one of our bankruptcy experts will talk with you about your financial debt situation and explain every available option for eliminating your debt so that you can decide if a Consumer Proposal may be the best way to help you get out of debt.

As a Trustee, Richard Killen & Associates are licensed by the Federal Government and operate under the authority of the Federal law and the Ontario courts. A Licensed Insolvency Trustee is held up by a strict code of ethics and follow the highest standards of professional and legal conduct. All these combines to guarantee you the best possible source of advice and information that you can’t get anywhere else.

Consumer Proposal Toronto FAQ

What is it?

A Consumer Proposal is a legal process under the Bankruptcy and Insolvency Act. It is a contract that legally binds you and your creditors to the following agreement:

  • That you pay back all, or just a portion, of your unsecured debt based on the amount you can reasonably be expected to pay.
  • You will make one monthly payment over a period of up to five years.
  • There will no further interest charge from your unsecured creditors or any additional fees for any of the debts covered by the proposal.
  • All the unsecured debts covered by the Consumer Proposal will be considered legally paid in full when you have paid the proposal in full.

What benefits will I get if I file a Consumer Proposal?

Individual consumers can enjoy the many protections and advantages of a Consumer Proposal in the Greater Toronto Area (GTA):

  • It immediately stops any lawsuits or garnishees and even collection calls.
  • It allows you to pay off your debts without filing for bankruptcy.
  • You will be able to keep your assets such as your house or car as long as you continue to keep your mortgage or car loan in good standing.
  • Interest charges and penalties stop from the date you file the consumer proposal.
  • It is the most effective way to make a settlement with your unsecured creditors.
  • It can be a good option if you don’t qualify for a debt consolidation loan.
  • It can be a good option for debts that can’t be included in a debt management program.
  • The amount you will need to pay will be negotiated with the creditors and will ultimately be based on what you can afford, not what you owe, unlike in a Debt Management Plan or a Debt Consolidation Loan where you are required to repay your debts in full.

Do I qualify for a Consumer Proposal?

  • If your unsecured debts total at least $1,000, but not more than $250,000 (not including your home mortgage), and
  • You are insolvent (which means you are unable to pay your current unsecured debts) and
  • You reside or carry on business in Canada – you qualify.

A consultation (it’s FREE) with a Licensed Insolvency Trustee such as Richard Killen & Associates Ltd. will help to properly determine if a Consumer Proposal is the right vehicle for you to solve your debt problems. We will do a detailed review of your financial situation and help you explore all your options, so you can make the decision that is best for you. It’s very empowering.

What kinds of debt are included in a Consumer Proposal?

Only unsecured debts can be dealt with by a consumer proposal. These include:

Credit cards

 Personal loans

 Some student loans

 Medical bills

 Payday loans

 Lines of credit

 Income taxes and GST/HST

Unsecured debts are not tied to any asset that you own, like your home or automobile.

Student loans, which are also unsecured debts, can only be resolved by a consumer proposal if you have been out of school for seven years on the date you file the consumer proposal. This means that if you have been out of school for 7 years and decide to include your student loans when you file for a consumer proposal, your student loan creditor can receive a share of the proceeds and the student loan amount will be automatically discharged after the payment period.

Secured debts, like a car loan or home mortgage, cannot be included in a proposal. They are backed by an asset, like your car or your house.

How will a Consumer Proposal impact my credit?

A note will appear on your credit report that you are making payments on a Consumer Proposal. This will be seen as an R7 rating on all the debts included in the proposal. This will stay on your record for the full length of your payment period and for an additional 2 years after you have successfully completed the proposal.

Obviously, a Consumer Proposal will have a negative effect on your credit score in such a way that it tells creditors that you do not currently have the ability to pay your debts the way the contract originally required. However, the damage to your credit is generally not quite as onerous to you as would be due to a bankruptcy. Essentially, there is a difference between a bankruptcy and the settlement effected by a consumer proposal.

Licensed Insolvency Trustees and Consumer Proposals

In Canada a consumer proposal can only be administered by a Licensed Insolvency Trustee. A LIT is registered with and licensed by the Federal government to perform insolvency procedures under the Bankruptcy and Insolvency Act of Canada (BIA).

If you decide to file a consumer proposal, a Licensed Insolvency Trustee will:

  • Draft the settlement offer to show your creditors how much you can pay each month and to make an offer for reducing the principal amount.
  • Certify that you have considered all your options.
  • Review and recommend the proposal to your creditors.
  • File the necessary documents with the government to officially start the proceeding.
  • Submit the proposal to your creditors and administer the entire process which includes accepting and reviewing all claims and recording the creditors’ response to your consumer proposal offer.
  • Receive your monthly payments and disburse the money to your unsecured creditors.
  • Provide at least two counselling sessions for your benefit.
  • Certify the completion of the payments and
  • File the completion certificate that will legally release you from all the unsecured debt covered in your consumer proposal.

Contact Us for More Information About Filing for a Consumer Proposal in Toronto

When you are looking for a solution to solve your financial troubles, filing a Consumer Proposal in Toronto may be a viable option for you. But that is something that only a Licensed Insolvency Trustee can properly determine after a thorough review of your financial situation.

Call Richard Killen & Associates to help you figure out how a proposal could work for you and your family. Talk to our team to discover all your options including consolidation loans, a consumer proposal, credit counseling and personal bankruptcy to help you choose which option is best suited for your individual circumstances.

Your initial consultation with us is free of charge and we can arrange an appointment in the evenings if that is more convenient for you. We want you to know that we make every effort to make you feel as comfortable as possible.

Richard Killen & Associates has debt counseling offices located across the Greater Toronto Area including Toronto, Scarborough, Mississauga, North York, Brampton, Georgetown and Pickering.

Contact us now and speak to a Licensed Insolvency Trustee through one of our offices and you will find out that making the call will be the most stress relieving call you will ever make!

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    About Richard Killen & Associates

    Since 1992, Richard Killen & Associates, a Licensed Insolvency Trustee, have helped thousands of people resolve their financial problems. With 25 years experience in this industry, our president, Richard Killen, and the rest of our team understand the difficulties that honest people can sometimes find themselves in. This expertise makes it possible to provide you with a service that effectively deals with the issues.

    Serving the GTA for 25 years