Consumer Proposal FAQs

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?
  16. Can you do a consumer proposal twice?
  17. Can a debt consulting company file a consumer proposal?
  18. Can I file a consumer proposal from outside of Canada?

 

FAQS 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.

FAQS 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.

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FAQS 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).

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FAQS 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.

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FAQS 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

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FAQS 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.

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FAQS 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.

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FAQS 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“.

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FAQS 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.

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FAQS 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.

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FAQS 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.

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FAQS 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.

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FAQS 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.

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FAQS 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.

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FAQS 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.

FAQS 16. Can you do a consumer proposal twice?

This will depend on whether you completed your first consumer proposal. Click here for more details.

FAQS 17. Can a debt consulting company file a consumer proposal?

No. If you wish to file a consumer proposal, go directly to an LIT. Most LITs (including Fong and Partners) will provide you with a free, no obligation consultation to determine if a consumer proposal is the right option for you.

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FAQS 18. Can I file a consumer proposal from outside of Canada?

Yes you can. Click here for more details.