Tag: consumer proposal canada

A CANADA TRUSTEE’S COMPLETE VIEW OF CANADA’S ‘TWO-SPEED’ ECONOMY: WHY CONSUMER INSOLVENCIES ARE SOARING WHILE CORPORATIONS AREN’T

Post author By Brandon Smith
Post date September 15, 2025

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The economy, much like a highway during rush hour, can move at different speeds. For some, it’s a smooth, open road. For others, it’s a gridlock of financial stress and mounting debt. As a Canada Trustee, I just read the new 2024-25 Annual Report from the Office of the Superintendent of Bankruptcy (OSB). It shows that Canada’s economy is looking more and more like this “two-speed” highway.

On one side, we have everyday Canadians and small businesses facing a significant increase in financial trouble requiring help with debt solutions. On the other hand, large corporations appear to be cruising along, handling economic bumps with ease. This striking difference is at the heart of the OSB’s 2024-25 Annual Report. It tells a powerful story about why more people are struggling and what the country’s official insolvency watchdog is doing about it.

This blog post will explore the key findings of the report, dive into the reasons behind this two-speed economy, and explain the important role of a Canada Trustee in helping people navigate these challenging times.

The Numbers Tell the Story: A Tale of Two Economies

The most surprising and important finding in the OSB’s report is the clear split between consumer and corporate financial health. The numbers don’t lie.

First, let’s look at the side of the road where most people are stuck: the world of consumer debt.

The OSB accepted 143,864 insolvency filings in the 2024-25 fiscal year.
This represents a notable increase of 7.6% from the year before.

To put this into perspective, an insolvency filing is when an individual or a small business officially asks for help with their debts, usually through a bankruptcy or a consumer proposal. Both these administrations occur under the Canadian Bankruptcy and Insolvency Act (BIA). A 7.6% jump in one year is a significant red flag. It points to a growing number of Canadians who are feeling the squeeze and can no longer keep up with their financial commitments.

Now, let’s look at the other side of the highway, where the big companies are. The OSB also tracks filings under the Companies’ Creditors Arrangement Act (CCAA). The CCAA is a law used by large corporations that need to restructure and reorganize their business when they are in serious financial trouble.

There were only 70 CCAA filings in 2024-25.
This is actually a decline of 2.8% from the previous year.

This is the core of the “two-speed” economy. The number of everyday people needing help is climbing fast, while the number of big companies in distress is going down. This trend suggests a Canada where financial stability depends heavily on your size. If you are a large, well-established company, you have been able to navigate recent economic challenges. But if you’re an individual, a family, or a small business, the ride has been much bumpier.

Why Are More Canadians Drowning in Debt?

The OSB report doesn’t go into a deep analysis of the “why” behind these numbers, but it points to some key factors that are widely recognized as the main drivers of financial stress. These are not new headlines, but their combined effect has been felt more deeply this year.

Inflation and the Rising Cost of Living: We’ve all felt it at the grocery store, the gas pump, and in our monthly bills. Inflation means that our money doesn’t go as far as it used to. For many families, this has made it harder and harder to afford the necessities of life. When prices for food, housing, and transportation keep climbing, it leaves less money for everything else, making it difficult to pay off existing debts.
High Interest Rates: Over the past couple of years, central banks have raised interest rates to try and control inflation. While this is a necessary step for the economy, it has a direct and painful effect on anyone with a mortgage, car loan, or credit card debt. Higher interest rates mean that more of your money goes toward interest payments and less goes toward paying down the actual debt. This can turn a manageable debt load into an impossible one very quickly. A higher interest rate on a mortgage can add hundreds, or even thousands, of dollars to a person’s monthly expenses, putting immense pressure on their budget.

When you combine these two factors, you get the perfect storm for consumer financial distress. A family might be earning the same income, but their expenses are higher, and the cost of servicing their debt is higher. Something has to give, and for many, that “something” is their ability to stay on top of their financial obligations. It’s a situation where hard work and careful budgeting are simply not enough to keep up with the rising costs. This is often the point where people begin to look for solutions and seek the help of a Canada Trustee.

Why Are Big Companies Staying Afloat?

The other half of the story is why large corporations seem to be faring so much better. While the OSB report does not provide a detailed explanation for this, we can draw some logical conclusions based on the nature of a large business.

Large companies are often more resilient to economic headwinds than small businesses or individuals. They have some advantages that help them ride out the storm:

Financial Resources: Large corporations typically have significant cash reserves and better access to credit. This means they can absorb higher costs and interest rates more easily. They can borrow money at lower rates and for longer terms than an individual.
Diversification: Many big companies operate in multiple industries or regions. If one part of their business is struggling, another part might be thriving, helping to balance things out.
Ability to Absorb Costs: Large companies have more power to pass along increased costs to their customers without losing them. They also have the resources to find ways to cut costs in their own operations, such as by streamlining processes or using new technology.

This creates a clear imbalance. While a single person might be overwhelmed by a credit card payment jump of $50, a large corporation can absorb an increase of millions of dollars in interest payments without having to file for protection. The system is designed to allow large corporations to handle big economic swings, but it leaves individuals and small businesses much more exposed. This is why the role of a Canada Trustee becomes so crucial.

Introduction: Understanding the Role of a Trustee in Canada

The OSB’s report mentions that a Canada Trustee is a key figure in the country’s insolvency system. But what exactly are licensed insolvency trustees, and what do they do? The term “trustee” is used to describe a professional who holds property and acts on behalf of others. This role is a foundation of Canada’s legal and financial system.

What is a Canada Trustee? Defining the Core Concept

Licensed Insolvency Trustees are federally regulated professionals. They help people and businesses with serious debt problems. They are the only professionals allowed to handle insolvencies in Canada. The OSB report shows they play a key role during financial hardship. They act as a link between a person in debt and their creditors. The person who gives the property to the trustee is called in this case, a bankrupt.

The Foundation of Trust: Legal Framework and Fiduciary Duty

The most important part of being a Canada Trustee is the “fiduciary duty.” The word “fiduciary” comes from a Latin word that means “trust,” and this is the core of the relationship. A trustee has a legal and moral obligation to always act with honesty, loyalty, diligence, and prudence. They must put the interests of the beneficiaries or creditors ahead of their own. This means they must avoid any personal conflicts of interest and not try to profit from their role. The trustee must also be ready to account for everything they do, keeping accurate records of all financial transactions concerning the trust property.

Why Canada Trustees are Essential in the Canadian Landscape

Trustees are an essential part of the Canadian legal landscape because they provide a way for someone to manage important assets or affairs for another person, especially if that person is unable to do so themselves. A trustee can be appointed in a will, chosen through a separate trust document, or appointed by a court. For instance, a trustee can be appointed to manage an inheritance for a minor or to handle the finances of an adult who is no longer capable of making their own decisions and handling their financial situation on their own.

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The Diverse Landscape of Trusteeship in Canada

While the blog focuses on the Licensed Insolvency Trustee, it’s important to know that the term “trustee” covers a wide range of roles in Canada.

Licensed Insolvency Trustees (LITs): Navigating Financial Hardship

This is the specific type of Canada Trustee that the OSB report focuses on. A Licensed Trustee is a professional who specializes in helping individuals and businesses with serious debt problems. They are the only professionals legally authorized to administer insolvencies in Canada. As the OSB report shows, they play a critical role in times of financial hardship, acting as a link between a person in debt and their creditors.

Estate Trustees (Executors): Stewarding Legacies

An Estate Trustee, often called an executor, is a person named in a will to manage and settle the affairs of someone who has died. Their duties are numerous, including making funeral arrangements, locating all of the deceased’s assets, paying off any debts and taxes, and finally, distributing what is left to the beneficiaries as directed by the will.[8, 9] It is a legally demanding role that requires careful attention to detail.

The Public Guardian and Trustee (PGT): Protecting Vulnerable Interests

Each province has a Public Guardian and Trustee, a government office created to protect the legal and financial interests of the most vulnerable people in society.[10, 11, 12, 13] The PGT acts as a trustee of last resort when there is no trusted family or friend available to do so.[10, 13] This includes protecting the interests of mentally incapable adults, children under a certain age, and deceased or missing persons when no one else can administer their estate.

Professional Trustees and Trust Companies: Specialized Asset Management

For those with large or complex estates, or when family conflicts are a concern, a professional trustee or trust company can be appointed to handle the trust property. These are professional fiduciaries—often a trust department of a bank or a private trust company—that are fully staffed with experts in law, taxes, and finance. They offer expertise and impartiality and can take on the day-to-day work of managing a trust.

Judicial Trustees: Court-Appointed Oversight

In some cases, a court may appoint a judicial trustee.] This happens when a person with mental or physical challenges needs help with their finances, and there is no one else to step in. A judicial trustee is authorized by the court to manage a person’s money and property, ensuring their bills are paid and their needs are met.

Core Responsibilities and Fiduciary Duties of a Trustee

Regardless of the type, every Canada Trustee is held to a high standard of conduct and has specific duties that are legally binding.

The Paramount Fiduciary Duty: Acting in the Best Interest of Beneficiaries/Creditors

An Estate Trustee, also called an executor, is named in a will to manage and settle a deceased person’s affairs. Their duties include making funeral arrangements, finding all assets, paying debts and taxes, and distributing what is left to beneficiaries as the will directs. This role requires careful attention to detail. The licensed trustee firm, Ira Smith Trustee & Receiver Inc., also acts as a court-appointed independent Estate Trustee.

Prudent Management of Trust Property and Assets

A Canada Trustee has a duty to manage and invest the assets they control responsibly and prudently. This means they must make informed decisions and act as a careful person would in similar circumstances. They must avoid risky or speculative investments and must treat all beneficiaries fairly.

Legal Compliance and Regulatory Adherence

A trustee must always follow the law. This can be complex, as a Canada Trustee must comply with a range of federal and provincial laws, as well as the terms of any will or trust document. For example, an Estate Trustee must ensure that all debts and taxes are paid before distributing assets, or they could face personal liability. In Ontario, the Trustee Act comes into play.

Reporting, Disclosure, and Accountability

A trustee must keep detailed and accurate records of all transactions and be ready to show these to the beneficiaries at any time. This “duty to account” is a crucial part of their role, ensuring that they are transparent and accountable for their actions. If a trustee fails in their duties, they can be removed by the court and ordered to pay for any losses.

Trustee Remuneration: Compensation for Services Rendered

Trustees are entitled to be paid for their services.] How much they are paid is usually determined by the will or trust document, or if not specified, it is decided by provincial law or the court. For example, the Public Guardian and Trustee of British Columbia charges prescribed fees for their services, typically ranging from 3% to 5% of the estate’s value.

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Navigating Financial Challenges: How Trustees Provide Debt Relief

As the OSB report highlights, the need for debt relief is growing. This is where the Licensed Insolvency Trustee becomes the most relevant kind of Canada Trustee for many people.

Understanding Financial Difficulties and Debt Problems

The first step in seeking help is acknowledging the problem. The OSB report shows that more Canadians are facing a financial gridlock due to factors like high interest rates and the rising cost of living. When you find yourself unable to pay your bills, a Licensed Insolvency Trustee is the professional to consult.

Options for Individuals: Consumer Proposals and Personal Bankruptcy

While consumer credit counselling can help many Canadians manage their debts, sometimes your financial situation requires more powerful legal solutions. When your debt load exceeds what you can realistically repay through traditional methods, consumer proposals and personal bankruptcy offer legal protection and genuine fresh starts.

As a Licensed Insolvency Trustee serving the Greater Toronto Area, I help people understand when these formal insolvency options become necessary alternatives to credit counselling. These government-regulated processes can eliminate or significantly reduce your debts while protecting you from creditor actions – something that consumer credit counselling services cannot legally provide.

If you’re facing overwhelming debt that exceeds 40% of your annual income, dealing with aggressive collection actions, or finding that minimum payments aren’t making a real dent in your balances, it may be time to explore these more comprehensive debt relief solutions that only Licensed Insolvency Trustees can administer:

Consumer Proposals: A consumer proposal is a legally binding offer to your creditors to pay back a portion of what you owe over a set period (up to five years).
Personal Bankruptcy: This is a legal process that allows you to be released from your debts and get a fresh financial start.

A Licensed Insolvency Trustee ensures that your rights are protected throughout these processes.

Corporate Insolvency and Restructuring

Beyond personal debt, a Licensed Insolvency Trustee also plays a key role in helping businesses that are in financial trouble. They can help companies reorganize and restructure their debt, which can save the business and its jobs. The OSB report’s mention of a decline in corporate filings suggests that this part of the economy is holding steady, but the service remains critical for businesses in distress.

Choosing the Right Canada Trustee for Your Specific Needs

The type of Canada Trustee you need depends entirely on your situation. Knowing who to turn to is the first step toward finding a solution.

When to Consult a Licensed Insolvency Trustee

You should consult a Licensed Insolvency Trustee when you are facing debt problems that you cannot solve on your own. They are the only ones who can legally help you with options like a consumer proposal or bankruptcy. A consultation with an LIT is free and will help you understand your situation and your legal options without any obligation.

When to Plan for an Estate Trustee/Executor

This is a step you should take when you are planning your will. Naming a trustworthy and competent person or company as your Estate Trustee is crucial for ensuring that your wishes are carried out and your beneficiaries are protected.

When the Public Guardian and Trustee May Be Involved

The PGT is an office of last resort. This means you should only expect them to be involved if there is no other suitable person to act as a trustee for a vulnerable individual or an estate. If you are worried about a family member who needs help, but no one is available to act, you can contact the PGT’s office.

When to Engage a Professional Trustee or Trust Company

A professional trustee is a good choice if you have a large and complex estate, or if you anticipate conflicts between family members after your death. They can provide professional expertise and impartiality, which can save a lot of stress and family disputes in the long run.

Key Factors in Trustee Selection

When choosing any type of Canada Trustee, remember to consider factors beyond just a personal relationship. Trustworthiness is a given, but you should also look for someone with the right skills, knowledge of tax and legal requirements, and the ability to act prudently and impartially.

Canada trustee

Regulatory Oversight and Professional Standards for Canadian Trustees

The different types of trustees in Canada are held accountable by various regulatory bodies and legal frameworks, ensuring they maintain high professional standards.

Licensed Insolvency Trustees (LITs): As the OSB report makes clear, LITs are strictly regulated by the Office of the Superintendent of Bankruptcy. The OSB conducts office visits, initiates compliance actions, and launches professional conduct investigations to ensure that LITs are following all the rules.
Estate Trustees: The duties of an Estate Trustee are regulated by provincial laws and overseen by the courts. If a trustee fails in their duties or mismanages an estate, the courts can remove them and hold them personally responsible for any losses.
Public Guardian and Trustee (PGT): These are government-appointed roles, and their authority and duties are set out in provincial laws.] They are held to the highest ethical and legal standards.
Trust Companies: Trust companies, which are often a part of a bank, are highly regulated entities.[16] They are regulated at the federal level by organizations like the Financial Consumer Agency of Canada (FCAC) and the Office of the Superintendent of Financial Institutions (OSFI).

Canada Trustee Conclusion

The OSB’s 2024-25 Annual Report shows that Canada’s economic reality is difficult for a growing number of people. In this “two-speed” economy, the role of a trusted professional like a Canada Trustee is more important than ever. Whether you need help with debt, are planning your will, or are a family member of a vulnerable person, knowing who these professionals are and how they can help is the first step toward securing your financial future.

The path to financial freedom in Canada’s current economic climate may be challenging, but it is not impossible. With the right information, a clear plan, and professional guidance, you can overcome your cost-of-living and debt challenges and move towards a more secure and hopeful financial future.

You’re not alone in this. There’s a path forward, and it starts with reaching out for the right kind of help. Take that step—you deserve it. If you’re a GTA resident dealing with overwhelming debt, don’t wait for your credit situation to get worse. As a licensed insolvency trustee serving Toronto, Mississauga, Brampton, Markham, and surrounding areas, I’m here to help you understand your debt relief options.

Free consultation available:

No obligation to proceed
Complete review of your debt and credit situation
Clear explanation of how debt relief options affect your Equifax credit score
Practical next steps you can take immediately

Remember: Your current financial situation doesn’t define your future. With the right help and information, you can overcome both debt challenges and credit score problems.

As a licensed insolvency trustee serving the Greater Toronto Area, I encourage consumers and business owners to view financial difficulties not as failures but as challenges that can be addressed with proper guidance. By understanding the warning signs of insolvency and seeking professional advice early, many people and businesses can find a path forward – whether through restructuring, strategic changes, or in some cases, an orderly wind-down that protects their future opportunities.

Remember: The earlier you seek help for company insolvency concerns, the more options you’ll have.

If you or someone you know is struggling with too much debt, remember that the financial restructuring process, while complex, offers viable solutions with the right guidance. As a licensed insolvency trustee serving the Greater Toronto Area, I help entrepreneurs understand their options and find a path forward during financial challenges.

At the Ira Smith Team, we understand the financial and emotional components of debt struggles. We’ve seen how traditional approaches often fall short in today’s economic environment, so we focus on modern debt relief options that can help you avoid bankruptcy while still achieving financial freedom.

The stress of financial challenges can be overwhelming. We take the time to understand your unique situation and develop customized strategies that address both your financial needs and emotional well-being. There’s no “one-size-fits-all” approach here—your financial solution should be as unique as the challenges you’re facing.

If any of this sounds familiar and you’re serious about finding a solution, reach out to the Ira Smith Trustee & Receiver Inc. team today for a free consultation. We’re committed to helping you or your company get back on the road to healthy, stress-free operations and recover from financial difficulties. Starting Over, Starting Now.

The information provided in this blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content should not be relied upon as a substitute for professional guidance or consultation. The author, Ira Smith Trustee & Receiver Inc., and any contributors do not assume any liability for any loss or damage.

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Brandon Blog Post

CONSUMER PROPOSAL IN ONTARIO: OUR COMPREHENSIVE GUIDE TO ELIMINATE YOUR DEBT

Post author By Brandon Smith
Post date September 9, 2020

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

Consumer proposal in Ontario introduction

I will begin with a consumer proposal in Ontario definition:

A consumer proposal is a formal binding deal made to your unsecured creditors to resolve your debt for less than the total owing. To help you decide if a consumer proposal in Ontario is the right choice for you, I will answer the most often asked questions.

A consumer proposal in Ontario: Is it worth it?

I say most definitely indeed. A successful restructuring is binding on all unsecured creditors. It is a legitimately binding deal between you and your creditors if the offer is accepted. A consumer proposal in Ontario is an excellent debt settlement plan for people who have the ability to pay off a percentage of their debts, however not their total debt.

**What is a consumer proposal in Ontario?**

A consumer proposal in Ontario is a means to stay clear of filing bankruptcy by negotiating with your creditors to pay off a portion of what you owe. If you have high and even just average month-to-month income, it is a more sensible alternative to remove your debt obligations this way than to declare bankruptcy. This procedure leads to a lawfully binding contract between you as well as your unsecured creditors that allows you to resolve your financial debts at a much lower rate, interest-free, over an extended time period.

The Licensed Insolvency Trustee (Trustee) in a consumer proposal is inspired to find the sweet spot for both the debtor and the creditors. A number that is sufficiently high that it is a better alternative for your creditors than your bankruptcy. That number has to be acceptable to the creditors yet realistic as to what you can afford to pay in monthly instalments of no more than 60 months.

A consumer proposal is usually the way of achieving that goal. In reality, the leading advantage is that you get to keep all your assets. Such a proposal can last up to a maximum of 5 years. It is a debt relief remedy that permits you to eliminate your debt by only paying off a portion. When you file, any interest charges stop. Unlike a bankruptcy, in a consumer proposal in Ontario, you get to keep your possessions.

**When is a consumer proposal in Ontario appropriate?**

To discover out if a consumer proposal is a right option for you, set up a meeting with a Trustee to review your individual scenarios.

The Trustee will review your financial situation as well as describe the advantages and disadvantages of the numerous options that can help you fix your financial troubles.

If you make a decision to submit a consumer proposal in Ontario, the Trustee, who is called an Administrator under a consumer proposal will deal with you to establish a debt settlement plan that helps both you as well as your creditors.

A consumer proposal in Ontario: How do you qualify for one?

A consumer proposal in Ontario is for people who are able to make some payments to creditors. However they need to change the present arrangement of their repayments because it deals with a portion of their creditors or debts, but not all of them.

You can submit a consumer proposal if you are an individual that owes $250,000 or less in unsecured financial obligations.

The large distinction between bankruptcy and this sort of restructuring plan is the monthly settlement. As soon as the arrangement is finalized and the plan agreed to, you make a single payment each month while the proposal is running.

The consumer proposal in Ontario is one of the most frequently used options for settling your debts in Ontario and the rest of Canada. If you and your Trustee determine that a consumer proposal is much better for your financial scenario than bankruptcy or any type of various other debt-relief option. You and your Trustee will begin to craft a negotiation deal. Your deal will be evaluated by your creditors.

A consumer proposal in Ontario is normally the preferred option to bankruptcy. Part of making a decision about whether bankruptcy or a consumer proposal is right for you is recognizing what sort of financial debts can be included and will be discharged when the proposal is successfully finished.

**When is the right time to file a consumer proposal in Ontario?**

A consumer proposal in Ontario is for individuals who are not able to pay their debts off in full every month. The right time to file is if any of the following sounds familiar. You:

can only afford to make the minimum monthly payments on your credit cards;
are being called by bill collectors;
make interest-only payments because you cannot afford to pay down the principal amount of any debt;
get calls from Canada Revenue Agency (CRA) trying to collect past due taxes;
are being sued by creditors;
have CRA or judgment creditors garnisheeing your bank account or your wages;
need to use an overdraft facility or line of credit in order to make ends meet each month;
are working and have money left over at the end of each month AFTER reversing any amounts paid in the month towards their debts.

If you answered yes to one or more of these questions, then now may be the right time for you to file a consumer proposal in Ontario.

What happens if I co-signed a loan with someone?

If you submit a consumer proposal in Ontario, your co-signer will certainly be responsible for repaying these financial obligations; the financial debt will certainly not be gotten rid of unless you are able to file a joint consumer proposal. If you cannot file a joint consumer proposal, then the other person would have to look at filing their own consumer proposal in Ontario.

**What happens when I file a consumer proposal in Ontario?**

A consumer proposal in Ontario does not handle secured creditors. Submitting one can make keeping up with your home mortgage or auto loan easier. Look at your regular monthly budget plan, and see if you think you can pay for a consumer proposal. This process does NOT affect the mortgage on your residence or a secured automobile financing arrangement.

A proposal is a contract made between you and your creditors. With a legally-binding consumer proposal filing, you need to repay a percentage of your financial debts and/or expand the time you need to repay your debts completely. For those that can not manage to repay their financial obligations, it is the best financial debt consolidation program available. If you are looking for a debt settlement, this is a far better option.

For the majority of people, a consumer proposal in Ontario is a more attractive option to bankruptcy; nonetheless, it is still thought about as a kind of insolvency procedure. For Canadians looking for debt relief, it is a choice for insolvent debtors that isn’t as severe as declaring bankruptcy. During your initial no-cost consultation, your Trustee will certainly describe all your financial debt settlement choices to determine which one is the most appropriate one for you.

The Trustee acting in your consumer proposal acts as the Administrator. Within 10 days after filing with the Office of the Superintendent of Bankruptcy Canada (OSB), the Administrator will certainly prepare a report describing the outcomes of its investigation, the Administrator’s point of view regarding whether the consumer proposal is fair and sensible for the creditors and the debtor, and whether the debtor will have the ability to perform it.

The consumer proposal Ontario rules state that documents have to be successfully filed, the plan approved by your creditors and court-approved, and the debtor making all the payments promised in the plan. At that point, the trustee issues a certificate of full performance. The Trustee provides you with a copy and also files a copy with the OSB.

**What does a consumer proposal in Ontario do to your credit?**

Leaving debt behind with a consumer proposal in Ontario is commonly the preliminary step to improving your credit score. Much like any type of debt settlement program, getting through a consumer proposal successfully will ultimately improve your credit score. Most people see a rejuvenation in their credit score swiftly after finishing the program.

For those that don’t want to go file for bankruptcy, the consumer proposal in Ontario is much less intrusive. A proposal is integrated with needed credit counselling. If you are unable to settle every one of the unsecured debts that you owe, nevertheless, have consistent work and income, you can find that a consumer proposal in Ontario is a viable alternative to bankruptcy.

**Once your consumer proposal in Ontario is completed, you are in the next phase of taking control of your finances**

A proposal is a practical choice if you have surplus income or assets you want to maintain. A proposal is a legal action under the Bankruptcy and Insolvency Act (Canada) (BIA) that supplies a stay of proceedings that immediately stops all creditor lawsuits and other actions. This includes most wage garnishments and calls from creditors and collection agencies.

If you are dealing with creditor calls or being threatened with legal action, this consumer proposal process can assist you to remove your financial debts.

Settlements in a consumer proposal in Ontario are worked out upfront. The responsibilities called for in a proposal are less than those in personal bankruptcy. A consumer proposal has actually fewer needed duties than bankruptcy. As you can see, it is a viable means to remove all your frustrating unsecured financial obligations and to get your life back on track.

A consumer proposal in Ontario is also something to think about if your month-to-month payments under a different debt management strategy may be too expensive for you to manage. Your regular monthly repayment on your consumer proposal is remitted to your creditors by the Trustee.

What happens to my credit cards when I file a consumer proposal?

When you file a consumer proposal in Ontario or any other part of Canada, you do not need to turn over your credit cards to your Trustee. Nonetheless, the reality that you submitted a consumer proposal will turn up on your credit record.

When your Trustee sends a notice to any credit card company you owe money to, they will certainly recognize it. They will then cut off your ability to make use of your charge card. If you have a charge card where you do not owe any money on when you file, that credit card firm will not obtain notice of your filing due to the fact that they are not a creditor of yours when you file a consumer proposal in Ontario.

Nonetheless, when they do their typical ongoing credit review of you, they will discover that you have filed. When they learn of your filing, they might very well stop you from being able to use that credit card.

**Which debts are eligible for a consumer proposal in Ontario?**

The majority of your unsecured financial obligations can be combined and consequently eliminated in an effective consumer proposal in Ontario. Some unsecured debt cannot be compromised. As an example, a lot of student loans frequently can not be included, especially if it has actually been less than 7 years from when somebody stopped being a full time or part-time student.

Also, your valid secured financial obligations are likewise not compromised.

**A consumer proposal in Ontario will eliminate income tax owing**

A consumer proposal in Ontario and the rest of Canada is the only technique that can be made use of to pay less than the total amount of the taxes you owe to the CRA. A consumer proposal is a safe as well as a trustworthy way to eliminate your financial obligations but it can likewise be the cheapest in terms of regular monthly repayments. The consumer proposal will take care of your income taxes owed from tax returns that were submitted prior to the proposal date.

Due to the fact that each personal situation is distinct, the advantage of a consumer proposal is that it can be tailored particularly to satisfy your requirements. This is the only government-approved debt negotiation alternative for resolving your debts in Canada, besides an assignment in bankruptcy. A consumer proposal is an option to discuss repayment terms with your creditors via the Trustee, for a lot less than what you owe today.

The CRA collector is not allowed to consider accepting less than 100% of what you owe to CRA unless you file a consumer proposal.

What consumer proposal in Ontario stage are you at?

Regardless of what stage in this process you may go to (even if you are still considering one), you probably have questions about what to anticipate after your consumer proposal in Ontario is filed. A consumer proposal is better than a bankruptcy with regard to your credit rating. A consumer proposal is an R7 rating and is a little bit of an improvement for eliminating everything you owe, in return for the effort of paying off a part of what you owe. A successful consumer proposal will in fact assist you to prevent bankruptcy.

An additional advantage of a plan similar to this is that your Trustee is typically able to work out a higher principal decreases than you might by yourself. What sets this plan apart from paying the minimum payments allowed by your creditors by yourself is the truth that a consumer proposal freezes your interest and penalty charges. Once accepted and approved, it is a binding contract between you and your creditors. Once you fully perform the consumer proposal in Ontario, your creditors will consider your financial debts paid in full for much less than what you in fact owe.

A consumer proposal is an extremely typically utilized means to resolve your financial obligations, without declaring bankruptcy. A consumer proposal is a very powerful legitimately binding method to settle your debts, which normally puts an end to garnishments and also various other legal activities against you and stops collection telephone calls, as well as allow you to maintain control of your assets.

**What happens if I miss a payment for my consumer proposal in Ontario?**

In making a proposal to your creditors, it is necessary for you to make your month-to-month payments in a timely manner. If you miss 3 payments during the term of the proposal, it is annulled. This means that the consumer proposal in Ontario is brought to an end by default.

In certain scenarios, an amended proposal might be submitted before the default happens. However, when a default occurs and an amended proposal is not submitted and accepted by the unsecured creditors in time, the debts owing to the unsecured creditors are not discharged.

In this situation, the unsecured creditors will start to seek payment from you directly for the total of your pre-proposal financial debts. If you have actually defaulted and the consumer proposal is annulled, you are forbidden from filing another consumer proposal in Ontario and elsewhere. However, you can file for bankruptcy.

**What happens to my credit score if I file a consumer proposal in Ontario?**

When you file a consumer proposal in Ontario, you will be given an R7 score, which shows you have made a settlement with your creditors. This score will remain on your credit report for three years after your consumer proposal has been fully paid off.

**How much does a consumer proposal in Ontario cost?**

A consumer proposal in Ontario costs need to be in accordance with the provisions of the Typically, a Trustee will work with you to establish the total amount you need to provide for your creditors in a consumer proposal. This calculation does not take into account the Trustee’s fee and disbursements allowed under the BIA.

The Trustee can take its fee and expenses from the funds you pay into the consumer proposal as allowed by the BIA. It’s vital to keep in mind that you need to never ever be billed directly for any services connected to filing a consumer proposal in Ontario.

**Is a consumer proposal in Ontario right for you?**

This is a remarkable program for individuals, households, and sole proprietors who are encountering economic hardship and require a sensible option to their debt troubles. This procedure has no covert costs. While a consumer proposal commonly lasts longer than bankruptcy proceedings, the complete cost to you may be much less since you retain your assets and also there are no surplus income payments.

A consumer proposal is a feasible option to manage small business debts in a proprietorship if the overall unsecured debts do not exceed $250,000. This program is not for debts owed by an incorporated business. There is a debt relief program in the BIA for companies. A consumer proposal in Ontario is just one of the most effective, and also best, financial debt settlement options that are readily available.

What is a consumer proposal helpful for? It is a fantastic way to take advantage of a lot of the benefits of bankruptcy without serious disadvantages such as the loss of assets. All of your assets need to be accounted for, but they are shielded from a seizure when your consumer proposal is approved.

Both bankruptcy and a consumer proposal are financial debt elimination choices allowing those that are in substantial debt to get out from under that burden. However, the consumer proposal in Ontario is much less disruptive to their lives. Choosing to submit a consumer proposal is about being proactive in taking care of your financial obligations.

If your financial circumstance is such that budgeting or refinancing can not resolve your recurring economic crisis, a consumer proposal is probably the best choice under the BIA to resolve your debts. A consumer proposal may be the most effective way to help you stay clear of bankruptcy while settling your debts.

We customize each consumer proposal to fit your unique budget and circumstances. The payments you make are after that split among your unsecured creditors. We also help you with your go-forward plan after filing your consumer proposal in Ontario. As a qualified credit counsellor, we sit down with you to discuss your financial planning in two mandatory counselling sessions.

**What is a consumer proposal in Ontario summary**

I hope you found this consumer proposal in Ontario Brandon’s Blog about helpful. Sometimes things are too far gone and more drastic and immediate triage action is required.

Do you have too much debt? Are you in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt. You are worried because you are facing significant financial challenges.
It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a debt settlement plan, we know that we can help you.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team. That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.
Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

Tags Consumer Proposal, consumer proposal canada, consumer proposal in ontario, consumer proposal in ontario canada, consumer proposal ontario credit rating, consumer proposal ontario rules, consumer proposal ontario student loans, consumer proposal reviews, how much does a consumer proposal cost, Ira Smith Trustee, is consumer proposal worth it

Brandon Blog Post

WHAT IS A CONSUMER PROPOSAL? OUR AMAZING EXCELLENT INSOLVENCY FAQ PRIMER

Post author By Brandon Smith
Post date December 23, 2019

what is a consumer proposal

What is a consumer proposal introduction

Let us start with a what is a consumer proposal definition: A consumer proposal is a formal binding offer made to your creditors to settle your debt for less than the full amount owing.

To help you decide if a consumer proposal is the right option for you, I will provide answers to the most frequently asked questions I receive about what is a consumer proposal in Canada.

What is a consumer proposal?

A consumer proposal is a government-regulated debt settlement program filed with a Licensed Insolvency Trustee (Trustee). The purpose of filing one is to get rid of problem debt so that you can start the process of rebuilding your credit debt-free.

It can only be filed with the Trustee. When you sign your documents, they are then filed with the federal government. It is a legal process under the Bankruptcy and Insolvency Act (Canada) (BIA).

This process is a legal agreement between you and your creditors to repay part of the debt that you owe. If a simple majority, in dollars, of creditors agree to the terms you have offered, then your proposal is binding on all your unsecured debts.

What is a consumer proposal? It is a court-sanctioned process that allows you to negotiate a settlement with your unsecured creditors. This kind of arrangement does not deal with secured creditors.

What is a consumer proposal: Is it worth it?

I would say definitely yes. A successful restructuring is binding on all unsecured creditors. It is a legally binding deal between you and your creditors if the offer is accepted. A consumer proposal is the ideal debt repayment plan for individuals who are able to repay a portion of their debts, but not the full amount.

What is a consumer proposal? This consumer proposal process is a way to avoid filing bankruptcy by making a deal with your creditors to repay a portion of what you owe. If you have high or even just regular monthly income, it is a more sensible option to eliminate your debt obligation than to file for bankruptcy. This process results in a legally binding agreement between you and your creditors that allows you to settle your unsecured debts at a much lower rate, interest-free, over an extended period of time.

The Trustee’s motivation in a consumer proposal is to find a common sweet spot. A number is high enough that it is a better alternative for your creditors than your bankruptcy. A number that the creditors will likely accept yet still a number low enough that it is affordable for you to pay each month.

A consumer proposal is often the way of achieving that objective. In fact, the number one advantage is that you get to keep all assets. Such a proposal can last up to a maximum of 5 years. It is a debt relief solution that allows you to significantly reduce your debt and repay a portion without interest while keeping your assets. That is what is a consumer proposal.

What is a consumer proposal? How do you qualify for one?

A consumer proposal is for individuals who are able to make payments to creditors (either monthly or as a lump sum), but need to change the current arrangement of their payments.

You can file one if you are a person who owes $250,000 or less in unsecured debt.

The big difference between bankruptcy and this kind of restructuring plan is the monthly payment. Once the negotiation is complete and the arrangement agreed to, you make a single payment each month while the proposal is running.

The consumer proposal is one of the most frequently used options for getting out of debt in Canada. If you and your Trustee determine that a proposal is better for your financial situation than bankruptcy or any other debt relief option, you and your Trustee will begin to craft a settlement offer. Your offer will be reviewed by your creditors.

A consumer proposal is typically the preferred alternative to bankruptcy, both in terms of financial affordability and credit ratings. Part of deciding whether bankruptcy or a debt settlement is right for you is knowing what kinds of debts can be included and will be discharged when the process is successfully completed.

A consumer proposal does not deal with secured creditors. Filing one can make keeping up with your mortgage or car loan more affordable. This assumes that in your monthly budget, you can afford to keep them. If not, you will have to give them up to be able to get ones that you can afford. This process does NOT affect the mortgage on your principal residence or a secured car loan. That is what is a consumer proposal is not.

A proposal is an agreement made between the Trustee and your creditors. Through a legally-binding document, it requires you to pay off a percentage of your debts and/or extend the time you need to pay off your debts in full. For those who cannot afford to repay their debts, it is the best debt consolidation program available. If you are looking for debt relief, this is a better option.

For most people, a consumer proposal is a more attractive alternative to bankruptcy; however, it is still considered a form of the insolvency process. For Canadians seeking debt relief, it is an option for insolvent debtors that isn’t as severe as filing for bankruptcy. During your initial no-cost consultation, your Trustee will explain all your debt relief options to determine which one is the right solution for you.

The Trustee acting in your consumer proposal acts as the Administrator. Within ten days after filing with the official receiver, the Administrator will prepare a report containing the results of its investigation, the Administrator’s opinion as to whether the consumer proposal is fair and reasonable to the creditors and the debtor, and whether the consumer debtor will be able to perform it.

If the documents have been successfully filed, accepted by your creditors, court-approved, and then paid through completion, a certificate is given indicating the full performance of the proposal to you and the Official Receiver.

What is a consumer proposal? What does it do to your credit?

Getting out of debt with a consumer proposal is often the first step to rebuilding credit. As with any repayment program, including a debt management plan, this process will for a short while lower your credit score. However, most clients see an improvement in their credit scores shortly after completing the program.

For those who don’t want to go through the bankruptcy process, or want to keep more of their assets, the proposal is less invasive. A proposal is combined with mandatory credit counselling. Trustee fees come out of any monies paid to creditors. If you are unable to repay all of the unsecured debt that you owe but have a steady job and income you could find that a proposal is a viable alternative to bankruptcy.

Once your consumer proposal is completed, you are in the next phase of taking control of your finances.

A proposal is a viable alternative if you have significant surplus income or assets you want to keep. A proposal is a legal proceeding under the BIA that provides a stay of proceedings that immediately stops all creditor actions. This includes most wage garnishments and calls from creditors and collection agencies. If you are dealing with creditor calls or being threatened with legal action, this debt settlement process can help you eliminate your debts and stop dealing with those creditors again.

Payments in a consumer proposal are negotiated upfront. The duties required in a proposal are less than those in bankruptcy. A proposal has fewer required duties than bankruptcy. As you can see, it is a viable way to eliminate all your overwhelming unsecured debt and get your life back on track.

A consumer proposal is also something to consider if your debts are higher than $10,000 and your monthly payment under a debt management plan may be too high for you to afford. Your monthly payment on your consumer proposal is remitted to your creditors once all applicable fees have been paid.

A consumer proposal will eliminate income tax owing

For spouses, if your debts are generally common, you can make a joint consumer proposal. If such a joint filing is made, the unsecured debt threshold increases to $500,000.

A consumer proposal is the only method that can be used to negotiate a reduced balance owing to taxes to the Canada Revenue Agency. A consumer proposal is a safe and reliable way to get out of debt but it can also be the cheapest in terms of monthly payments. The consumer proposal will only include taxes owed from tax returns that were filed prior to the proposal date.

Because each personal situation is unique, the benefit of what is a consumer proposal is that it can be tailored specifically to meet your needs. This is the only government-approved debt settlement option for resolving your debts in Canada, besides filing an assignment in bankruptcy. A consumer proposal is an option to negotiate repayment terms with your creditors through the Trustee, for much less than what you owe today.

No matter what stage in this process you may be at (even if you are still considering one), you probably have questions about what to expect after your consumer proposal is finished. A consumer proposal is a little better than a bankruptcy with regard to your credit score. A consumer proposal is an R7 rating and a bit of an improvement in exchange for the effort of repaying a portion of what you owe. A successful consumer proposal will actually help you avoid bankruptcy.

Another advantage of an arrangement like this is that your Trustee is often able to negotiate greater principal and interest reductions than you could on your own. What sets this plan apart from paying the minimum payments to your creditors on your own is the fact that a consumer proposal includes freezing your interest payments and an agreement that your creditors will consider your debts paid in full for less than what you actually owe.

A consumer proposal is a very commonly used way to settle your debts, without declaring bankruptcy, (or filing for full bankruptcy, as it is referred to by many of our clients). The consumer proposal is a very powerful legally binding way to settle your debts, which normally puts an end to garnishments and other legal actions against you, stops collection calls, and allows you to maintain control of your assets.

Is a Consumer Proposal Right for You?

This is an exceptional program for individuals, families, and sole proprietors who are facing financial hardship and need a practical solution to their debt problems. This process has no hidden fees. While a consumer proposal often lasts longer than bankruptcy proceedings, the total cost to you may be less because you retain your assets and there are no surplus payments.

A consumer proposal is a viable option to deal with small business debts in a proprietorship if the total debts do not exceed $250,000. This program does not deal with debts owed by an incorporated business. It is one of the best, and safest, debt consolidation options available.

What is a consumer proposal good for? It is a great way to take advantage of many of the advantages of bankruptcy without the severe drawbacks such as the loss of assets you must endure during the bankruptcy process. All of your assets are protected from a seizure when your consumer proposal is accepted, and the more you can offer your creditors, the greater the likelihood that they will accept your proposal, thereby allowing you to keep all your assets.

Both bankruptcy and consumer proposals are debt relief options allowing those who are in a significant amount of debt to get out from under what they owe. However, the consumer proposal is far less disruptive to their lives.

Deciding to file a consumer proposal is about dealing with your debt, but I understand that you may be concerned about the impact a consumer proposal has on your credit report.

If your financial situation is such that budgeting or refinancing cannot resolve your ongoing financial crisis, a consumer proposal is one of the options under the BIA to resolve your debts. A consumer proposal may be the best way to help you avoid bankruptcy and achieve real relief from your outstanding debts.

Each situation is different. Each program is tailored to fit the budget and circumstances of each person. The payments you make are then divided among your unsecured creditors. As with bankruptcy, one of the immediate pros of entering such a debt settlement program is that it stops wage garnishments.

Even during the time that this debt settlement process is noted on your credit history, it may still be possible to obtain new credit, including renewal of ongoing commitments such as your mortgage, financing the purchase of a new vehicle, or even a credit card. For consumers who worked seasonally or have fluctuating income, a consumer proposal can be structured so that higher payments are made during peak earning times and lower payments are made during low earning times. Individuals who file a consumer proposal must complete two mandatory financial counselling sessions with a qualified insolvency counsellor.

What is a consumer proposal summary

I hope you found this Brandon’s Blog about what is a consumer proposal helpful. Sometimes things are too far gone and more drastic and immediate triage action is required.

It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team. That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation. We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

what is a consumer proposal

Tags Bankruptcy, Bankruptcy and Insolvency Act, BIA, Consumer Proposal, consumer proposal canada, Debt, how do you qualify for consumer proposal, insolvency, Ira Smith Trustee, is a consumer proposal right for you, is consumer proposal worth it, licensed insolvency trustee, offical receiver, Office of the Superintendent of Bankruptcy, trustee, what is a consumer proposal

Brandon Blog Post

CONSUMER PROPOSAL CALCULATOR REVIEW FOR YOU

Post author By Brandon Smith
Post date July 1, 2019

If you would prefer to listen to the audio version of this consumer proposal calculator Brandon’s Blog, please scroll down to the bottom of the page and click on the podcast

Introduction

A consumer proposal calculator is important to figure out what sort of debt settlement plan should be offered to your creditors. But to have a truly successful one, you really need clear language. In Brandon’s Blog, I review a recent court case that explains why.

Shelly Gail Corriveau bankruptcy

I recently read the Reasons for Decision dated June 13, 2019 by Registrar in Bankruptcy L.A. Smart of Court of Queen’s Bench of Alberta. This case is in the matter of the bankruptcy of Shelly Gail Corriveau. The case reference is Corriveau (Re), 2019 ABQB 438 (CanLII).

Ms. Corriveau filed an assignment in bankruptcy in April 2012. She had unsecured creditors of roughly $73,000. The reason for her insolvency was stated as offering monetary help to her child’s business. She was by all accounts a perfect example of an honest but unfortunate debtor. At the time of the bankruptcy, her only asset was her house.

In June 2012, Ms. Corriveau got a gift from her mom of $46,000. It featured instructions that $6,000 of those funds be utilized for children and certain other matters. She spent the $6,000 as instructed, with the balance of the $40,000 being paid to her licensed insolvency trustee (formerly called a trustee in bankruptcy) (the Trustee) for the benefit of her creditors.

The home was sold in October 2012. From the sale, she received her provincial exemption of $40,000 with the balance of $3,916.21 being paid to her bankruptcy estate.

Ms. Corriveau files a consumer proposal

On May 12, 2013, Ms. Corriveau advised her Trustee she had received an inheritance of $15,000 from her Mother’s estate. On May 26, 2013, Ms. Corriveau submitted a consumer proposal. The Trustee served as the Administrator of the consumer proposal.

The proposal in paragraph 4 states:

“4. That the following payments be made to [Name omitted to not embarrass the guilty] Trustee in Bankruptcy, the administrator of the consumer proposal, for the benefit of the unsecured creditors:

Proposal payments to total $10,000.00. The of (sic) funds will be provided to the Administrator as follows – $300.00 filing fee to be paid at time of filing and then a lump sum payment of $9,700.00 due 60 days after the proposal is court approved (all payments to be made within the 60 months proposal period)

The debtor reserves the right to accelerate payments should funds become available.

*** NOTE *** – There will be a significant dividend paid from the bankruptcy administration.”

In accordance with the requirements of the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA), the consumer proposal Canada read that the payments must be completed within 60 months.

The Trustee recommended acceptance of the proposal. In his report to creditors he stated:

“This proposal will provide the debtor with relief and allow the debtor’s affairs to be restructured in an orderly fashion. It will allow the debtor to annul her bankruptcy and provide for a greater return to the creditors when compared to the bankruptcy option.”

The consumer proposal was deemed accepted by the creditors and approved by the Court. Ms. Corriveau made all the required payments and received her Certificate of Full Performance on August 2, 2013.

Have you “Noted” the problem yet?

Under the BIA, a bankrupt is allowed to lodge a proposal with the Trustee; either a consumer proposal or a Division I Proposal. In either format, it is a debt settlement plan that the bankrupt is proposing for acceptance by the debtor’s creditors. By definition, if the proposal is fully carried out, then the person or company’s bankruptcy is annulled.

When bankruptcy is annulled, it is declared to have had no legal existence. It is as if it never happened. The annulment of the bankruptcy takes place upon the approval or deemed approved by the court of the consumer proposal. There will never be a distribution to the creditors from the bankruptcy administration. The Trustee, in this case, did not issue any funds from the bankruptcy, yet.

So the Note that the Trustee added, “There will be a significant dividend paid from the bankruptcy administration.” is problematic. Actually, it is more than problematic. It is just plain wrong.

Now the Trustee wishes to complete the bankruptcy administration. The Trustee submits its Statement of Receipts and Disbursements as required to the Superintendent of Bankruptcy (OSB) for approval. This issue came before the Court because of the OSB’s unfavourable comment letter dated June 15, 2018.

The Court’s analysis

Section 66.4(2) of the BIA states:

“Where consumer debtor is bankrupt

(2) Where a consumer proposal is made by a consumer debtor who is a bankrupt,

(a) the consumer proposal must be approved by the inspectors, if any, before any further action is taken thereon;

(b) the consumer debtor must have obtained the assistance of a trustee who shall act as administrator of the proposal in the preparation and execution thereof;

(c) the time with respect to which the claims of creditors shall be determined is the time at which the consumer debtor became bankrupt; and

(d) the approval or deemed approval by the court of the consumer proposal operates to annul the bankruptcy and to revest in the consumer debtor, or in such other person as the court may approve, all the right, title and interest of the trustee in the property of the consumer debtor, unless the terms of the consumer proposal otherwise provide.”

There is a similar provision for Division I Proposals.

The Court looked at the:

Statute
wording of the consumer proposal
Trustee’s report to the creditors on the consumer proposal; and the
Trustee’s actions in administering the proposal.

The Court had to decide if the Note was a term of the proposal or not. The Registrar took all factors into consideration, including that the Trustee issued to Ms. Corriveau the certificate evidencing full completion of the proposal upon her payment of $10,000.

The Registrar decided that the Note was an unfortunate error and that the only intention was for the creditors to share in the distribution from the consumer proposal with a gross value of $10,000.

Now for the treatment of the funds collected by the Trustee under the bankruptcy that is now annulled. The Registrar further concluded that consumer proposals that purport to also include a distribution from the funds held in the bankruptcy administration, must include clear and precise language in the proposal. The Registrar said that the Trustee failed to do so.

Therefore, the Registrar concluded that subject to any entitlement to fees by the Trustee from the bankruptcy administration, the funds held in the annulled bankruptcy are Ms. Corriveau’s property and should be returned to her. Costs of the application will be dealt with at the taxation of the Trustee’s account. The Trustee was directed to arrange a suitable date for that taxation to proceed before that Registrar.

Consumer proposal calculator summary

A proposal must offer the creditors a better result than what they would get in a person or company’s bankruptcy. So although a consumer proposal calculator is important, I think clear language is more important.

Are you in financial distress? Do you not have sufficient funds to pay your commitments as they come due?

Call the Ira Smith Team today so we can remove the anxiety, stress, pain and discomfort from your life that your money troubles have created. With the distinctive roadmap, we establish simply for you, we will quickly return you right into a healthy and balanced problem-free life.

As a Trustee, we are the only experts recognized, licensed and supervised by the federal government to give insolvency recommendations and to carry out insolvency procedures. A consumer proposal is a federal government authorized debt negotiation strategy to do that. We will assist you to choose what is best for you to rid yourself of your debt problems.

Call the Ira Smith Team today. We have years as well as generations of experience helping people and companies searching for debt restructuring, a debt negotiation strategy, or a consumer proposal Ontario to AVOID bankruptcy. You can have a no-cost evaluation so we can aid you to repair your financial problems. Call the Ira Smith Team today. This will let you return to a brand-new healthy and balanced life, Starting Over Starting Now.

Tags annul, assignment in bankruptcy, Bankruptcy, Bankruptcy and Insolvency Act, BIA, canlii, Consumer Proposal, consumer proposal calculator, consumer proposal canada, consumer proposal ontario, debt settlement, debt settlement plan, Ira Smith Trustee, licensed insolvency trustee, Superintendent of Bankruptcy, trustee in bankruptcy

Brandon Blog Post

CONSUMER PROPOSAL CANADA: A BLUEPRINT TO STOP BILL COLLECTORS

Post author By Brandon Smith
Post date May 27, 2019

If you would prefer to listen to the audio version of this Consumer proposal Canada Brandon’s Blog, please scroll down to the bottom and click on the podcast.

Introduction

I have written before on the concept of how a bankruptcy filing puts into place a stay of proceedings. A section of the Bankruptcy and Insolvency Act (Canada) (BIA) states that creditors are not allowed to take or continue any collection or enforcement activity against a bankrupt person or company. But what about a consumer proposal Canada? I will discuss this concept for a consumer proposal and highlight a recent case on this issue.

The federal law

Under section 69.2 (1) of the BIA, with certain limited exceptions, when a consumer proposal is filed, “…no creditor has any remedy against the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy…”.

So if the claim is one that is provable in a bankruptcy, and therefore in a consumer proposal Canada, then the creditor cannot begin or continue a lawsuit or try to enforce a judgment for the amount owed.

A recent decision from the Ontario Court confirms this law where a consumer proposal Canada will stop creditors and bill collectors from starting or continuing legal action against you.

The facts of this case

The case is Yigzaw v. Ashagrie, 2019 ONSC 2474. It is about a motion to lift the stay of proceedings to permit enforcement of an order issued against the debtors who have filed a consumer proposal.

The applicants, Philipos Yigzaw and Aster Abraham, seek to appeal an order issued by the Court on February 21, 2017 (the 2017 order). The 2017 order was gotten on the basis of summary judgment on an application started by the applicants. In their application, they sought repayment of $102,500 that they had advanced to the respondents Anaketch Ashagrie and Yilma Gari to fund a business operating under the name “Telling Roses”. They also seek an accounting of how the funds had actually been spent.

The 2017 order required Ashagrie and Gari to pay $102,500 to Yigzaw and Abraham in addition to costs of $6,250. The respondents were likewise required to provide an accounting. The Court declined to issue a certificate of pending litigation against the respondents’ residence, although a writ of execution was issued. The respondents submitted a consumer proposal the very next day.

In this enforcement motion, the applicants state that the respondents have failed to adhere to the 2017 order. They look for relief that would require Ashagrie and Gari to be examined and to pay the amount of the judgment. They also want a finding that the respondents are in contempt.

The issues for the Court to consider

The Court first considered section 69.2 (1) of the BIA I spoke about above. The Court then looked at the exception I alluded to, being Section 69.4 of the BIA.

That section says that a Court may, in certain circumstances, raise the stay to allow a creditor to pursue its rights against a debtor who has filed consumer proposal. To obtain a lifting of the stay, the creditor must persuade the Court that it is most likely to be materially prejudiced by the ongoing stay, or that lifting the stay is equitable on other grounds.

Canadian courts have held that the criteria in s. 69.4 might be fulfilled where the creditor’s debt will not be released as an outcome of the insolvency process. The types of financial obligations that are not discharged are provided in s. 178( 1) of the BIA.

They consist of a debt or obligation arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity as well as a debt or obligation resulting from obtaining property or services by false pretenses or fraudulent misrepresentation. Lifting of a stay is not a routine matter.

To succeed, the applicants have to show how they are most likely to be materially prejudiced by the stay, or that there are various other equitable grounds to raise it.

In a typical motion under s. 69.4, the applicant looking to lift the stay says that it needs to have the opportunity to prove that its accusations come from an activity provided in s. 178( 1) to ensure that it may obtain a judgment against the bankrupt or insolvent person. If successful, then that claim would survive the insolvency process.

In that normal case, the Court examines the creditor’s claims to identify if the debt, if confirmed, would be released as an outcome of the bankruptcy or proposal. Sometimes, the Court may also consider evidence submitted by the creditor.

This case is uncommon because the applicants have already gotten a judgment on their claim. They are not seeking to show their claim. They are looking to enforce the Order. So the concern the Court must think about is whether that Order was made according to a cause of action listed in s. 178( 1 ). The Judge did this by reviewing the claims and evidence before the Judge who gave judgment, his analysis, and the evidence filed in this motion.

The Court’s analysis

The Court quite properly pointed out that in order to be successful for the lifting of the stay, the applicants had to show that their debt was more than just one of a contract to lend money that was not repaid.

The Court said that looking at the application in the most charitable method possible, the claims could not support a finding that the respondents obtained property from the applicants by false pretenses or fraudulent misrepresentation. The applicants state that their loan was conditional on the money being used for “Telling Roses”. They do not declare that they were induced to loan money to “Telling Roses” as an outcome of any type of illegal misstatement by the respondents. Likewise, the applicants do not allege that the respondents took part in any kind of deceitful acts that induced them to loan the funds. Therefore, the exception from the discharge of the debt in s. 178( 1 )( e) of the BIA was not advanced in the applicants’ claim.

The allegations in the application also do not support a finding that the participants engaged in fraudulence, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity. To meet that standard it is not nearly enough for a debt to have actually been brought on by fraud, embezzlement, misappropriation or defalcation. That form of criminal activity had to have occurred in the context of a fiduciary relationship.

The applicants do not declare that the respondents had a fiduciary obligation towards them. The relationship they explain with the respondents would not follow such a claim. Fiduciary relationships are unusual in arms’ length business transaction. The applicants additionally do not clearly affirm that the respondents participated in any type of scam at any point.

In reviewing the reasons given by the Judge who made the 2017 order, and in looking at all the other evidence in this motion, the Court found that it was anything more than one party loaning funds to another to start a business. The business never made a profit, it failed and therefore, could not repay the money.

The decision

Given these facts and the Court’s analysis, the Court found that the applicants could not succeed on their motion to lift the stay. Rather, the Court confirmed that the 2017 judgment could only be used as the basis for the applicants to file a proof of claim in the consumer proposal filed.

The basis for the 2017 order was a finding that the applicants lent the respondents the amount of $102,500. There is absolutely nothing in the underlying decision, or in the accusations in the application on which judgment was obtained, or in any evidence submitted in this motion, that puts the applicants’ claim in the classification of financial debts that are not released under s. 178( 1) of the BIA.

Therefore, the applicants’ motion to lift the stay under s. 69.4 of the BIA was rejected. They failed to show that they are likely to be materially prejudiced by the ongoing operation of the stay or that there are various other equitable factors that would lead to a conclusion to lift the stay.

Do you have too much debt?

Are you in financial distress? Do you not have adequate funds to pay your financial obligations as they come due?

If so, call the Ira Smith Team today. We have decades and generations of experience assisting people looking for financial restructuring, a debt settlement plan and to AVOID bankruptcy.

As a licensed insolvency trustee (formerly called a bankruptcy trustee), we are the only professionals accredited, acknowledged and supervised by the federal government to provide insolvency advice and to implement approaches to help you remain out of personal bankruptcy while eliminating your debts. A consumer proposal is a government-approved debt settlement plan to do that. We will help you decide on what is best for you between a consumer proposal vs bankruptcy.

Call the Ira Smith Team today so you can eliminate the stress, anxiety, and pain from your life that your financial problems have caused. With the one-of-a-kind roadmap, we develop just for you, we will immediately return you right into a healthy and balanced problem-free life.

You can have a no-cost analysis so we can help you fix your troubles. Call the Ira Smith Team today. This will allow you to go back to a new healthy and balanced life, Starting Over Starting Now.

Tags Bankruptcy, Bankruptcy and Insolvency Act, bankruptcy and insolvency act canada section 178, bankruptcy filing, bankruptcy trustee, BIA, bill collectors, claim provable, Consumer Proposal, consumer proposal canada, consumer proposal vs bankruptcy, fraud, insolvency process, Ira Smith Trustee, licensed insolvency trustee, stay of proceedings

Brandon Blog Post

CONSUMER PROPOSAL CANADA PART OF BANKRUPTCIES LAWS IN ONTARIO?

Post author By Brandon Smith
Post date December 12, 2018

Introduction

I prepared this vlog to explain the differences between a consumer proposal (CP), one of the bankruptcies laws in Ontario and bankruptcy. This discussion is based on the inquiries that we are asked often. Hopefully, this information will help you understand better specifically what a CP debt settlement strategy is and how it will certainly assist you to remove all your financial obligations. All this while AVOIDING personal bankruptcy.

Main benefits of a CP

Take into consideration several of the benefits of the CP vs. bankruptcy:

- Unlike informal debt negotiation, the CP creates a forum where every one of your unsecured creditors must take part in for your debt restructuring.
- You keep your property.
- Legal actions against you on your property and debts, such as wage garnishments, cannot continue.
- You do not require to file an assignment in bankruptcy

CP vs. bankruptcy

How do I recognize if I have a financial problem?

If you are having difficulty satisfying your debts or have actually quit paying them, you are probably insolvent. Another sign of insolvency is that if your assets if liquidated, will not bring in enough money to pay off your debts. When you are all stressed out over the money you owe, for sure you will know that you have financial problems.

How do I know if I qualify for either a CP or bankruptcy?

Any person that is insolvent and owes greater than $1,000 is qualified to file either a CP or an assignment in bankruptcy in Canada.

Will I have to give up my assets?

As soon as you file for bankruptcy you will certainly have to give up your non-exempt property to the Trustee. These possessions will be marketed and sold. The cash from the sale of your property will be used to pay for the cost of the bankruptcy administration. The balance will be dispersed among your creditors.

In CP, you will not be giving up your assets. You are making an offer to your creditors less than the total amount you owe. According to the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA), your CP has to be a better result for your unsecured creditors than they would receive in your bankruptcy.

What occurs to my wages or salary?

Nothing. You receive it as normal.

In a CP that has been (deemed) accepted by your creditors and approved by the Court, you begin to make your payments. There are no other requirements for your income in CP.

In bankruptcy, nothing happens to your income either. However, in a bankruptcy, unlike a CP, your Trustee at the outset has to decide if you are required to make voluntary contributions to your bankruptcy case based off of your income. If so, this is called a surplus income requirement. Also, you will have to file monthly statements of income and expense with the Trustee. Your surplus income requirement can change, depending on if your income goes up or down. There is no such requirement in CP.

Canada Revenue Agency (CRA) has frozen my bank account and has garnished my earnings. Exactly how can I deal with that?

As stated above, once you file a CP, there is a stay of proceedings. Upon receiving notice from the Trustee, CRA stops the garnishee process and lifts the freeze on your account(s). The same is true in bankruptcy.

Will I still owe money after I declare bankruptcy or file a CP?

Perhaps, because of neither a CP nor bankruptcy covers:

secured creditors – mortgages, car loans;
student loans (if it is less than seven years since you ceased to be a full or part-time student)
alimony and support payments you must make in your divorce proceedings; and
debts arising from fraud.fines or penalties imposed by the court;

How much time will I be under the insolvency proceeding?

The duration of time in bankruptcy will depend on whether this is an initial or 2nd (or more) bankruptcy, whether you have to pay surplus income and if your discharge is opposed or not. Depending on your circumstances, it can be anywhere from 9 months to many years.

In a CP, you can take up to 60 months to pay the total amount you promised to pay. Payments in a CP are required monthly.

Will anyone find out that I have filed either a CP or for bankruptcy?

As soon as you file for bankruptcy or a CP, your Trustee must file a notification with the Office of the Superintendent of Bankruptcy Canada (OSB) to start either process. The OSB does run a public database showing the status of all files.

In either a CP or bankruptcy, your Trustee must send a notice to all of your creditors. So they will know.

In a CP or a shortened summary administration bankruptcy, the Trustee does not place a legal notice in the local newspaper advertising that you filed. In an ordinary administration bankruptcy, the Trustee must publish a notice.

Generally, it is only the OSB, your Trustee and your creditors who are aware of your filing.

Is my partner or spouse impacted by my CP or bankruptcy?

Your partner/spouse will not be impacted by your CP or bankruptcy unless he/she co-signed as a borrower or has guaranteed payment for any of your debts. If they have guaranteed some or all of your debts, then those specific creditors can ask your spouse for payment in full.

NOTE: There is a body of case-law to suggest that if your CP is fully performed, then there is no debt left for your guarantor to make good on. That type of discussion is too technical for this general blog. If you are in this situation, your spouse should get legal advice before agreeing to pay anything. No such argument could even be considered in a bankruptcy situation.

Just how will my CP or bankruptcy impact my existing divorce case?

In Canada, CP and bankruptcy filings do not conflict with the majority of the divorce procedures. In a bankruptcy, the Trustee will stand in the shoes of the bankrupt spouse. Ontario is an equalization Province; not a division of assets Province. If the bankrupt spouse is entitled to an equalization payment, that will come to the Trustee.

In a CP, the Trustee does not get involved at all in any way. The BIA does not interfere at all with non-financial divorce issues such as custody. It also does not have any effect on support or alimony.

Consumer Proposal Canada or bankruptcy: Conclusion

I hope this consumer proposal discussion about the differences between a Consumer Proposal Canada and bankruptcy has been helpful to you.

Do you have severe debt and don’t know where to begin to fix it? Are your debt issues causing you to lose sleep? Is too much debt triggering stress and anxiety, discomfort and pain? We know that discomfort better than anyone and we can get it out of your life.

If so, call the Ira Smith Team today. We have years and generations of experience helping people and companies seeking financial restructuring or a debt settlement strategy. As a licensed insolvency trustee, we are the only specialists recognized, accredited and supervised by the Federal government to give insolvency advice and remedies to assist you and to prevent bankruptcy.

Call the Ira Smith Team today so you can end the stress and anxiety financial problems create. With the special roadmap, we will develop with and special to you, we will promptly return you right into a healthy, balanced hassle-free life.

You can have a no-cost appointment to assist you so we can fix your debt troubles. Call the Ira Smith Team today. This will certainly allow you to make a fresh start, Starting Over Starting Now.

consumer proposal bankruptcies laws in ontario

Tags assignment in bankruptcy, bankruptcies laws in ontario, Bankruptcy, Bankruptcy and Insolvency Act (BIA), Canada Revenue Agency, consumer bankruptcy in Canada, Consumer Proposal, consumer proposal canada, consumer proposal vs bankruptcy, difference between consumer proposal and bankruptcy, insolvency, Ira Smith Trustee, Office of the Superintendent of Bankruptcy, personal bankruptcy, Should I Use Bankruptcy or a Consumer Proposal, surplus income

Brandon Blog Post

GUIDE TO THE DIFFERENCE BETWEEN DEBT SETTLEMENT AND CONSUMER PROPOSAL

Post author By Brandon Smith
Post date May 10, 2017

Difference between debt settlement and consumer proposal: Introduction

In last week’s vlog, “DEBT SETTLEMENT VS CONSUMER PROPOSAL CANADA: NEW CANADIAN GOVERNMENT REPORT EXPOSES DEBT SETTLEMENT COMPANIES HARMING CONSUMERS”, we reported on the recently released report by the Superintendent of Bankruptcy (OSB). The report is titled: “Review of Licensed Insolvency Trustee business practices to the administration of consumer insolvencies”. We gave an overview summary of the findings. In this vlog, we wish to get into some of the specifics of the OSB’s findings. The difference between such a settlement and consumer proposal when using a debt settlement company.

Difference between debt settlement and consumer proposal: Forced to pay money they can least afford

Cases handled by a Licensed Insolvency Trustee (LIT) that were referred by these types of settlement companies generally wound up paying much more for their insolvency case.

The debt consolidation companies called for a debtor to authorize a costly contract for speaking with the debt management company before being presented to a “picked LIT”. The people normally comprehended that the only function of the LIT as being restricted to the filing of the consumer proposal created by the settlement company!

In cases evaluated by the OSB, the consulting charge section of the contract contained a large amount for the debt consolidation company’s “help”. It was in the range of $2,400 to $4,200. For smaller consumer proposals, the OSB found that the consulting charge typically varied from 20% to 40% of the amount of the proposal.

Therefore, my read of this leads me to believe that certain LITs cooperated with such settlement companies to force insolvent debtors to pay thousands of dollars more than they otherwise needed to. These people could not afford this and did not deserve to be treated this way.

Debt specialist charges were purported to cover the expense of advising, conferences, recommendations as well as prep work of the consumer proposal. In all situations, the costs paid to the debt management company were IN ADDITION to the fees established under the Bankruptcy and Insolvency Act (Canada) charged by those LITs.

3bestaward

Difference between debt settlement and consumer proposal: If that isn’t horrendous enough, the debt management company sold them a larger bill of goods!

OSB’s study discovered that debtors were often marketed more products by the debt settlement companies. As a result, there were billings for extra recurring costs throughout the life of their consumer proposal!

The products the debt management companies pushed on these vulnerable people included:

loans charging a high rate of interest;
brand-new credit score tools;
a proposal insurance policy; and
“credit score restoring” loans.

All products carried either high-interest rates or high price tags.

Difference between debt settlement and consumer proposal: Forced to pay more than they should have

A technique identified throughout the OSB’s review entailed advertising and marketing “proposal insurance coverage”. This was normally billed as a month-to-month expenditure at a price of around 10% of the worth of the consumer proposal. This financing had recurring repayments supposedly for “credit rating fixing”.

In one instance, a debtor with a $31,900 consumer proposal signed up for proposal insurance coverage, structured as a loan. That base cost was about $6,300. Various extra fees, the month-to-month management cost as well as a 15% interest rate, the insurance coverage priced out at $9,150.

So, with the debt management company’s management fee of $2,300, the consumer proposal that the creditors voted to accept in the amount of $31,900 cost the insolvent individual $43,350!!! In my view, being merely associated with this type of behaviour is against the BIA, OSB Directives and the Canadian Association of Insolvency and Restructuring Professionals code of conduct for its members. As a LIT, I would never be associated with such disgraceful behaviour.

Difference between debt settlement and consumer proposal: Consumer proposals are like a 5-year interest-free loan, so why would you borrow to pay it off early?

An additional pattern observed in consumer proposals submitted by LITs dealing with debt management companies was the intro of “price cut terms”. This arrangement is for enticing the debtors to borrow money under arrangements made by the debt settlement company.

Incorporation of a discount rate provision provokes a debtor to become part of a brand-new as well as expensive loan scheme. To capitalize on a 25% discount rate condition in a $10,000 proposal, a debtor would finance $7,500. With paying $1,400 in compulsory charges, this brought the lending overall to $8,900. At a promoted rate of interest of 22.99 %, with a payment timetable of $214 over 84 months, the borrower would certainly pay $10,475 in charges as well as a rate of interest, for an overall of $17,975.

A consumer proposal is like an interest-free loan. The same debtor with the same beginning consumer proposal of $10,000, would only pay that amount if they went directly to the LIT first. The debtor would have had a maximum of 60 months to complete making the payments with no interest charges at all. A savings of $7,975 and lower monthly payments.

As you can see, involving the debt settlement company increased the cost for an insolvent person dramatically for no value.

Difference between debt settlement and consumer proposal: Other findings

Other findings by the OSB include:

the LIT files did not contain any obvious evidence of debt settlement company certification or experience in credit counselling or the counselling of insolvent debtors;
consumers who filed with a LIT through the debt settlement company did not have a good understanding of the insolvency process, the options that were available to them or the other charges they were paying to the debt settlement company
the consumers were not aware that they could have avoided charges such as paying a debt consultant to prepare the consumer proposal
that the documentation made ready for the consumer proposal filing by the debt settlement company and used by the LITs contained many errors
Statements of Affairs, as well as Income and Expense Forms submitted, were incorrect in different ways
Debt settlement company fees were not disclosed
Real estate was always undervalued compared to LIT files where there was no involvement of a debt settlement company

Difference between debt settlement and consumer proposal: What you can do

The OSB is considering its next steps. The OSB is requesting comments. We have already provided ours. Our recommendation was that all LITs who cooperated with debt settlement companies as we have described here should be brought up on disciplinary charges by the OSB. If you agree that this way of doing business on vulnerable and unsuspecting consumers who are truly looking for professional help must stop, please click here to offer your own comments to the OSB.

In the meantime, if you have too much debt, please DO NOT be fooled by the debt settlement companies. Stay far away from them. Instead, contact a LIT directly.

We are debt professionals who will evaluate your situation and recommend which debt relief options are right for you. We will do so in a free consultation. A consumer proposal is one option; there are others as well.

Contact Ira Smith Trustee & Receiver Inc. today for a free consultation. There is no need for you to pay fees to a debt settlement company when you can get the same information from us for free.

You’ll be in good hands and Starting Over, Starting Now you can be well on your way to living a debt free life.

difference between debt settlement and consumer proposal

Brandon Blog Post

▓ VIDEO: CONSUMER PROPOSAL VS. PERSONAL BANKRUPTCY ▓

Post author By Brandon Smith
Post date September 24, 2015

consumer proposal vs. personal bankruptcy

This short video (found at the bottom of this page) explains the differences between a consumer proposal vs. personal bankruptcy. A consumer proposal is a deal to end your debts. A consumer proposal is a legally binding process that is administered by a licensed trustee. Ira Smith Trustee & Receiver Inc. is a Toronto bankruptcy trustee and consumer proposal administrator.

We have written previous blogs about consumer proposals, including:

We offer personal bankruptcy and consumer proposal services, as well as corporate restructuring and corporate receivership and bankruptcy services to residents of the Greater Toronto Area. We explain the differences between a consumer proposal vs. personal bankruptcy. In most cases we can get a consumer proposal done and it usually results in a substantial reduction in the amount you have to repay. The amount you are required to pay when you file a consumer proposal depends on a number of factors as explained in this short video. We hope that you find the short video informative and interesting. If you have any topics about debt, insolvency or finances that you would like us to cover in future videos, please let us know by leaving a comment.

If you are experiencing financial problems, or you know that you are insolvent and are considering a consumer proposal vs. personal bankruptcy, or looking at all of your realistic options, including all alternatives to bankruptcy, contact Ira Smith Trustee & Receiver Inc. We offer sound advice, a free consultation and a solid plan for Starting Over, Starting Now so that you’ll be well on your way to a debt free life in no time.