What is a consumer proposal?
The rising cost of living is forcing many Canadians to choose between buying food and paying their bills.
If you cannot keep up with soaring prices and struggle to make your debt repayments, filing a consumer proposal in Toronto could change your life.
Thanks to government legislation, a consumer proposal allows you to settle your debts for less than is owed and repay what you can afford in single monthly payments with zero interest.
You could write off up to 80% of your debt and resolve your financial problems for good.
When you file a consumer proposal, all collection calls, wage garnishments, and legal action stop.
You can spread your consumer proposal payments over five years, which lowers your monthly payment, but you can complete your consumer proposal at any time without any penalties or interest.
Most unsecured debts, such as credit cards, loans, tax debts, payday loans, utility bills and lines of credit, can be included in a Toronto consumer proposal.
If you have secured debts, you can keep paying them or give up the asset to the lender. Any outstanding debt is added as unsecured debt to your proposal.
You can include student loans in a consumer proposal if you’ve been out of school for seven years or more.
A Licensed Insolvency Trustee is the only person who can administer consumer proposal services in Toronto. Use the form below to get a free call from a local trustee to see if you qualify.
Pros and cons of a Toronto consumer proposal
A consumer proposal is a popular way to clear your debts, but it might not be the right move for you. Here are the pros and cons of consumer proposals.
- Pay less than you owe.
- Affordable monthly payment.
- Keep your assets, like your house and car.
- Zero interest.
- No hidden fees.
- Stop collection calls, wage garnishments and legal action.
- Avoid personal bankruptcy.
- Legally binding on creditors.
- Debt free within five years.
- You must have enough money to make monthly payments.
- Negatively affects your credit score.
- Secured debts cannot be included.
It’s Canada’s best debt forgiveness program
A consumer proposal is the only legal way to seek debt forgiveness without filing for bankruptcy.
File a consumer proposal
Erase your debt by filing a consumer proposal.
- Lower your bills
- Keep your assets
- Freeze interest
- Stop collections
- Reduce your debt
It only takes 30 seconds and it's free.
How popular are consumer proposals in Toronto?
Consumer proposals are hugely popular: 2,834 Canadians chose to file a consumer proposal in the second quarter of 2022 alone.
What does a consumer proposal cost?
How much a consumer proposal costs will depend on the amount of debt, the creditors involved, your income, and whether you have assets.
- Pay what you can afford.
- No upfront fees.
- You pay exactly what your creditors agree to.
- The total amount never changes, even if your income increases.
- Trustee fees are paid from your proposal at no additional cost.
Creditors may expect a percentage of the debt to be paid back. You may need to offer more money to major creditors to ensure they accept your offer.
You must offer your creditors more money than they would receive if you declared bankruptcy.
Use the consumer proposal calculator to estimate what your monthly payments might be.
Will creditors accept my offer?
Creditors must vote to accept your offer, each creditor having one vote per dollar owed. A majority vote amongst creditors is needed for the proposal to be accepted.
Some creditors may attach additional terms before they accept your proposal, but your trustee will ensure your offer has the best chance of success.
Once accepted, the agreement is legally binding for all of your creditors.
Protect your assets in a consumer proposal
The great thing about a consumer proposal is that you can protect your assets, including your home, car, savings and tax refunds.
Secured assets aren’t affected as long as you continue making payments toward them.
Your home in a consumer proposal
You can protect your house in a consumer proposal. Your trustee will calculate the amount you need to offer your creditors to protect your home equity.
If you have enough equity to cover your debts, you pay your entire debt in a consumer proposal, with the benefit being that payments are interest-free. Think of a consumer proposal as debt consolidation without the interest.
Consumer proposal qualifying criteria
You may qualify for a consumer proposal in Toronto if you meet the following criteria:
- Your total debt is less than £250,000 (excluding your mortgage).
- You are unable to pay your debts.
- After bills, you can afford to make a monthly payment towards your debt.
You must include all of your unsecured creditors to file a consumer proposal. To complete the process, you must attend two credit counselling sessions.
Get debt relief
Free consultation with a Licensed Insolvency Trustee by video, phone or in person.
- Experienced trustees
- Local offices
- Personalized plan
- No fees
It only takes 30 seconds.
How does a consumer proposal affect your credit?
A consumer proposal will negatively impact your credit score after you file, but it can help you repair your credit faster than you could on your own.
At this point, your priority should be to deal with your debts. A good credit score is worthless if you have unmanageable debt. Lenders want to know if you can repay the loan and look at your debt-to-income ratio to help them decide.
Credit reporting agencies will add your proposal to your credit report. It remains there for either three years after discharge or six years from the date you filed (whichever is sooner).
The consumer proposal process
You must meet with a Licensed Insolvency Trustee to file a consumer proposal. Your trustee will offer unbiased advice based on your unique financial situation and determine if a consumer proposal suits you.
A trustee will work with you to create a payment plan that your creditors will accept. Once they do, it becomes legally binding.
A LIT’s role is to manage your proposal and help you through the consumer proposal process.
Beware of debt settlement companies that advertise debt relief programs in Canada. These are unlicensed and unregulated firms (often with bad reviews) that cannot file a consumer proposal or bankruptcy – only a Licensed Insolvency Trustee can do so.
Speak to a Licensed Insolvency Trustee
The next step is to get in touch with a Licensed Insolvency Trustee in Toronto for expert financial advice. They will give you a call to discuss the best way to settle your debts and help you decide whether to file a consumer proposal.
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