The consumer proposal process says bankruptcy may not be necessary
This is the story of Mary and Paul, who thought they would have to file bankruptcy, but instead, were able to avail themselves of the consumer proposal process. Mary took a job right out of college but recently she’s had to take a lot of time off to care for her sick husband Paul. With reduced income they are now considering bankruptcy. They went to visit a licensed insolvency trustee. A professional who is licensed by the Office of the Superintendent of Bankruptcy can practise as a licensed insolvency trustee. The trustee told them that the bankruptcy route may not be necessary.
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Explaining the consumer proposal process
The trustee recommended a bankruptcy alternative called the consumer proposal. The consumer proposal process is an offer to creditors to pay back a percentage of what is owed over no more than period of up to five years. There are advantages to filing for consumer proposal:
- you get to keep your possessions;
- collection calls and lawsuits are stopped;
- wage garnishment is stopped; and
- if successful, you will avoid bankruptcy.
Mary and Paul really liked the idea of avoiding bankruptcy. To get things underway, the trustee explains that Mary and Paul must provide a complete list of what they own and what they owe. The trustee will put a consumer proposal process together based on their ability to pay. The proposal will be filed with the Office of the Superintendent of Bankruptcy. This is the federal organization that regulates Licensed Insolvency Trustees.
Once it is filed, Mary and Paul will stop making payments directly to their unsecured creditors. The trustee also explains that after filing the consumer proposal and related documents with the Office of the Superintendent of Bankruptcy, the trustee will then submit the consumer proposal to the couples’ creditors. The creditors will then have 45 days for accepting or rejecting the consumer proposal. If the creditors are unsatisfied with the consumer proposal the trustee may also negotiate so that a consumer proposal acceptable to the creditors which Mary and Paul can afford will be established.
Once the consumer proposal is accepted, Mary and Paul will then be responsible for making periodic payments to the trustee. The trustee will use that money to make a distribution to the creditors. Mary and Paul will also have to attend two counselling sessions to help them. If Mary and Paul make all the required payments and attend the two counselling sessions, then they will be legally released from the debts that were included in the consumer proposal. Mary asked if her and Paul’s credit rating will be affected. The trustee answered yes it will be affected but once the consumer proposal is fully completed, they can start rebuilding their credit.
How can you determine if the consumer proposal process can help you with your debt?
If you’re considering bankruptcy you need the services of a licensed insolvency trustee. Contact Ira Smith Trustee & Receiver Inc. We provide the depth of expertise found in a large company, delivered in an informal setting. We ensure you will receive a high quality and cost effective service.
We will use our combined 50+ years of experience dealing with diverse issues and complex files, to solve your financial problems and provide you with the highest quality of professional service. Take the first step to Starting Over, Starting Now by calling us.
THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track
