Don Allen - Bankruptcy Trustee & Receiver
Trustee & Receiver
705-733-1511 1-888-504-1511
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Consumer Proposal FAQs

Who qualifies for a consumer proposal?

  • Those who owe unsecured debt of up to $250,000, excluding a house mortgage
  • You must be able to pay a portion of your debts
  • Your debts must be greater than what you own (your assets)

Can I afford a consumer proposal?

When can I file a joint consumer proposal?

  • When debts are similar; and
  • Joint debts are less than $500,000.

How is a consumer proposal accepted or rejected?

  • Creditors have 45 days to accept or reject the proposal
  • To be accepted, unsecured creditors with a majority of dollar value (over 50%) of your debt must accept the proposal

What happens if the consumer proposal is rejected by the creditors?

  • We as your Trustee will discuss with you revising the proposal slightly and we will communicate this with your creditors to try to get acceptance; or
  • We can review and help you with the alternative of  filing bankruptcy; or
  • You can continue to deal with your creditors as if nothing has been filed.

What debts are included in a consumer proposal?

  • All unsecured debt such as credit cards, income taxes, lines of credit and personal loans.

Can creditors garnishee my pay or accounts?

  • Once you consumer proposal has been accepted, we will arrange for your garnishment to stop – creditors can only collect money from the Trustee.

What is the difference between debt consolidation and a consumer proposal?

  • A consolidation loan can combine all your debt into one monthly payment at a lower interest rate, however, it has to be negotiated with each creditor you owe money. A consumer proposal is a monthly payment negotiated with all creditors by us as proposal administrator for an amount less than what is owed, with zero interest. Once a proposal is accepted by your creditors, it is legally binding on all unsecured creditors. Pay it as agreed and you will have no more obligations to your creditors.

Am I allowed to save money while I am in a consumer proposal?

  • Yes you can save money as long as you make your payments under the proposal terms,

What is the cost of a consumer proposal?

  • Cost is based on paying an acceptable percentage portion of your unsecured debts. See our Debt Options Calculator to calculate an estimate of your monthly payments based on your situation.
  • We work with you to establish payment terms that you can handle – generally monthly or lump sum amounts
  • Payments need to be completed over up to 5 years
  • The Trustee collects your monthly payments and distributes them to your creditors, therefore ending communication between you and your creditors and collectors.

What is the Trustee’s role and cost?

  • As Trustee, we are the proposal administrator, representing you as the debtor and all the creditors
  • We provide FREE initial consultation to understand and determine your best solution.
  • Our fees are set by government rates, which are deducted from your proposal contribution amounts so there is no extra cost to you.
  • In effect the creditors are absorbing the cost of the proposal

Will a consumer proposal affect my credit rating?

  • Yes - most credit reporting agencies in Canada will place a note on your file indicating that you have filed a consumer proposal and a record will remain for 3 years after you finish making all proposal payments. You will be coded as an R7 (perfect credit is an R1, and bankruptcy is an R9, so a proposal is slightly better than a bankruptcy).

How does a consumer proposal compare with personal bankruptcy?

What are the advantages of a Consumer Proposal?

  • You can avoid bankruptcy
  • You negotiate to repay only a portion of your total debts
  • You will not be required to surrender any assets
  • Your creditors are restricted from taking any legal action against you
  • The majority of wage garnishment orders are immediately stopped
  • Interest is frozen on the date that you file
  • If accepted by a majority of the dollar value of your creditors, the proposal is binding on ALL of your unsecured creditors
  • You do not pay any hidden fees; the proposal administrator is paid from the proceeds of the proposal, so in effect your creditors are paying the cost of filing the proposal
  • A consumer proposal is not as negative on your credit rating - you can rebuild your credit rating faster, starting this during the performance of the proposal

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