Consumer Proposal Ontario | Fong and Partners Inc.

Consumer Proposal

Introduction

You’re probably reading this because you’ve typed in the phrase “consumer proposal Ontario” in Google’s search engine.

If you’re financially distressed, you may considered a number of options to deal with your debt including a debt consolidation loan or credit counselling. You may have even considered filing for personal bankruptcy.

A debt consolidation loan may seem like a good idea, however, you may not qualify for a loan if you have a low credit score.

If debt consolidation loan isn’t viable, you can consult with an accredited credit counsellor who will put you on a Debt Management Plan (DMP). A DMP will allow you to pay off your debts over a longer period of time – usually 60 months. The counselor may also be able to negotiate a reduction in the interest rate. Despite all these positives, a DMP will have a negative impact on your credit. Moreover, if you’re unable to pay off all your debts over a 60 month period, this won’t be a viable solution for you.

Filing for personal bankruptcy also has some major disadvantages:

    • Upon filing bankruptcy, a record of your bankruptcy will stay on your credit report for 7 years.
    • With certain exceptions, your assets become the property of the bankruptcy estate. This becomes a particularly important issue if you own a home with substantial equity.
    • Although attitudes are changing, there is still a stigma attached to the concept of filing for personal bankruptcy.

Given the above points, it would be prudent to consider another alternative to deal with your debts. The best alternative is called a “consumer proposal” to creditors.

This is a video providing an overview of how a consumer proposal works when you file one with a Licensed Insolvency Trustee.

Consumer Proposal Ontario – How It Works

A consumer proposal is a formal repayment plan governed by the Bankruptcy and Insolvency Act. Assuming your debts do not exceed $250,000 (this threshold excludes debts secured by a residential property), the steps in filing a proposal in Ontario are as follows:

  • You would seek the assistance of a Licensed Insolvency Trustee who will assess your eligibility to file a consumer proposal by reviewing the following factors:
    • Your income and your contribution to the income of your household.
    • The amount of debt you owe.
    • Your assets.
    • Whether you’ve previously been bankrupt.
  • The Trustee will work with you in drafting a consumer proposal to your creditors.
  • The proposal is then filed with the Office of the Superintendent of Bankruptcy (a division of the federal government that monitors insolvency proceedings in Canada). Upon filing the proposal with the OSB, your creditors are legally stopped from taking any action against you.
  • The proposal is sent to your creditors for their review. A document called a voting letter, which allows a creditor to indicate its vote, is also sent. Creditors are required to file with the Trustee a proof of claim and completed voting letter before their claim can be registered for voting on the proposal.
  • At the end of the 45-day period after the proposal was filed with the OSB, the Trustee will compile and review the voting letters received. There are 3 possible scenarios:
    • If no voting letters were received, the creditors are “deemed” to have accepted the proposal.
    • If those creditors voting “no” comprise less than 25% of the value of claims filed, the creditors are deemed to have accepted the consumer proposal.
    • If those creditors voting “no” comprise more than 25 percent of the value of claims filed, the Trustee is required to hold a meeting of creditors. Creditors will usually vote “no” because they want more money. Therefore, a meeting of creditors would be held to discuss what the debtor would have to offer in a consumer proposal before it would be accepted by the dissenting creditor(s).
  • Once your creditors have accepted your proposal, there is a 15-day waiting period that allows any interested parties (e.g., creditors, the Trustee, or the OSB) to request that the Bankruptcy Court review the . Once that 15-day period expires, the is deemed to be accepted by court.
  • If your proposal is not approved by the creditors and the court, you’d essentially in the same position he was prior to filing – at the mercy of your creditors. In that event, you may want to consider filing for bankruptcy.

Consumer Proposal FAQs

  1. How much does a consumer proposal cost?

  2. Will a consumer proposal affect my credit?

  3. Who can file a consumer proposal?

  4. Can a consumer proposal be rejected?

  5. Why would a consumer proposal be rejected?

  6. Will a consumer proposal affect my employment?

  7. Will a consumer proposal affect my spouse?

  8. Will a consumer proposal affect my mortgage?

  9. Will a consumer proposal affect my sponsorship?

  10. How can I rebuild credit after a consumer proposal?

  11. Can I file a consumer proposal after bankruptcy?

  12. Will my consumer proposal be approved if RBC is a creditor?

  13. What is the difference between a consumer proposal and bankruptcy?

  14. Can you make a consumer proposal to the Canada Revenue Agency?

  15. Is a consumer proposal worth it?

1. How much does a consumer proposal cost?

We shall calculate your consumer proposal payments based on the following factors: (1) the income of your household and your contribution to it; (2) your assets; (3) the amount of debt you owe; and (4) whether you’ve previously filed for bankruptcy.

Our fees are paid out of your consumer proposal payments according to a tariff under the Bankruptcy and Insolvency Act. To be more specific – you do not pay a separate fee for our services – your proposal payments include our fees as well as the settlement payment to your creditors.

Also, at Fong and Partners Inc., the only up front cost you’ll pay to start the consumer proposal process is a $100 filing fee. You needn’t pay anything else until your consumer proposal is approved.

Click here for more details.

2. Will a consumer proposal affect my credit?

A consumer proposal will affect your credit. A record of your consumer proposal will be on your credit file from the day you file your proposal until it’s paid in full and a further 3 years thereafter. For example, if you file your consumer proposal on November 2019 and it’s paid in full by November 2022, a record of your proposal stays on your credit file until November 2025. The more quickly you pay off your proposal, the more quickly you can rebuild your credit.

Click here for more details.

3. Who can file a consumer proposal?

Any person who is unable to pay her debts as they become due can file a consumer proposal so long as the total debts do not exceed $250,000. This $250,000 threshold excludes debts secured on a principal residence (e.g., mortgage or home equity line of credit).

Click here for more details.

4. Can a consumer proposal be rejected?

Yes, a consumer proposal can be rejected by creditors. A consumer proposal will be rejected by creditors if those creditors holding the majority of dollars owed vote against the proposal at a meeting of creditors. However, what often happens is that rather than outright rejecting a proposal, creditors will make a counteroffer to you (i.e., they’ll ask for more money). If you agree to accept the creditors’ counter, an amended consumer proposal will be tabled at the meeting of creditors and it will be accepted at that meeting. On the other hand, if both you and the creditors cannot come to an agreement of terms, the proposal will be rejected at the meeting of creditors. If that happens, you can always file another consumer proposal that provides more favourable terms to the creditors. Or alternatively, you can file for personal bankruptcy.

Click here for more details.

5. Why would a consumer proposal be rejected?

Aside from requesting more money from your consumer proposal (as described in Point 4), another reason why a consumer proposal might be rejected by your creditors is that they found evidence of questionable conduct with respect to your financial affairs

Click here for more details.

6. Will a consumer proposal affect my employment?

Generally speaking, it will not. The Bankruptcy & Insolvency Act, which is the law that governs consumer proposals, states that “no employer shall dismiss, suspend, lay off or otherwise discipline a consumer debtor on the sole ground that a consumer proposal has been filed in respect of that consumer debtor.”

With that being said, if you happen to be a licensed professional, you should inquire with your licensing body if filing a consumer proposal would affect your ability to be licensed.

Click here for more details.

7. Will a consumer proposal affect my spouse?

It will not. However, if your spouse co-signed your debts, the completion of your proposal won’t release your spouse’s liability if he or she was a co-signer or guarantor of your debts.

Click here for more details.

8. Will a consumer proposal affect my mortgage?

The answer is “no” – so long as your payments are being made on time, a consumer proposal will not affect your mortgage. The Bankruptcy & Insolvency Act states that “no person may terminate or amend any agreement, including a security agreement, with the consumer debtor, or claim an accelerated payment, or the forfeiture of the term, under any agreement, including a security agreement, with the consumer debtor, by reason only that the consumer debtor is insolvent or a consumer proposal has been filed in respect of the consumer debtor“.

Click here for more details.

9. Will a consumer proposal affect my sponsorship?

The answer is no. Your ability to sponsor is only affected if you are an undischarged bankrupt. A consumer proposal is not a bankruptcy.

Click here for more details.

10. How can I rebuild credit after a consumer proposal?

You can start rebuilding credit as soon as your consumer proposal is approved by your creditors. The easiest way to do so is by obtaining a secured credit card.

Click here for more details.

11. Can I file a consumer proposal after bankruptcy?

The short answer is “yes”. However, there are two different circumstances where you would file a consumer proposal after bankruptcy.

Click here for more details.

12. Will my consumer proposal be approved if RBC is a creditor?

This answer to this will depend on how much of your overall debt is owed to the Royal Bank of Canada and how willing you are to acquiesce to their demands for amendments to your consumer proposal if they request it.

Click here for more details.

13. What is the difference between a consumer proposal and bankruptcy?

The difference lies in the treatment of assets, the effect on your credit and the effect on your net monthly income.

Click here for more details.

14. Can you make a consumer proposal to the Canada Revenue Agency?

Absolutely! Under a consumer proposal, tax debts owed to the Canada Revenue Agency are treated like any other debts. And “tax debts” include debts for personal income taxes as well as business-related debts such as GST and payroll taxes.

Click here for more details.

 

15. Is a consumer proposal worth it?

If you want:

    1. Certainty that your creditors will be bound by your proposal so long as the majority of creditors vote in favour of it.
    2. Certainty that your monthly payments will be fixed irrespective of any changes in your income.
    3. The ability to keep your assets, including any financial windfall you may receive after your proposal has been approved by your creditors.
    4. The ability to rebuild your credit faster, starting as soon as your proposal is approved by your creditors.

Then a consumer proposal is definitely worth it! Click here for more details.

 

If you want to work with a Trustee who will give you confidence and peace of mind that your consumer proposal is being dealt with in a professional manner, look no further.

Reviews of Our Services

Steve
Steve

Victor was quick to contact me and the consistent contact was amazing. Victor is really passionate about listening to my needs and it showed as his service with me was nothing short of an amazing experience. He went out of his way to meet on my sched and his attention to detail is exceptional. If yo

Erin Dunn
Erin Dunn

Victor and his team (Mary) were always extraordinarily prompt with their responses to any inquiries and went out of their way to respond to questions in detail. They were extremely helpful at all times, even after my Proposal was completed. VIctor is an excellent advocate for his client's needs and

S Bal
S Bal

I searched for a Trustee online and Victor was the only one who really sat down and listened to my issues. He explained to me what is to come in the next five years of my life and thereafter. Mary, his office assistant has been very helpful whenever I have questions. Thank you for helping me.

Roger Silva
Roger Silva

Victor and his team were amazing. Treated us with the upmost professionalism. Answered all our questions, took care of everything and turned an unfortunate situation and made it much less stressful. I highly recommend Fong and Partners. Thank you all for your support through the process.

Maricar Venturanza
Maricar Venturanza

Working with Victor Fong was great. We just finished our consumer proposal a week ago and the entire process was quite easy. Mary was amazing at answering all my questions and accommodating me when I had any questions or concerns. Her response time was impeccable. Our initial meeting with Victor wa

 

Contact Fong and Partners Inc., a member in good standing with the Better Business Bureau with an A+ Rating and  one of the 3 Best Rated Trustees in the Greater Toronto Area.

Phone: 416-260-3264

Email:   help@startingovertoronto.com