{"id":8847,"date":"2019-12-23T21:00:33","date_gmt":"2019-12-24T02:00:33","guid":{"rendered":"http:\/\/www.irasmithinc.com\/blog\/?p=8847"},"modified":"2020-08-21T21:09:03","modified_gmt":"2020-08-22T01:09:03","slug":"what-is-a-consumer-proposal-insolvency","status":"publish","type":"post","link":"https:\/\/irasmithinc.com\/blog\/what-is-a-consumer-proposal-insolvency\/","title":{"rendered":"WHAT IS A CONSUMER PROPOSAL? OUR AMAZING EXCELLENT INSOLVENCY FAQ PRIMER"},"content":{"rendered":"
\"what
what is a consumer proposal<\/figcaption><\/figure>\n

What is a consumer proposal<\/em> introduction<\/b>\u00a0<\/span><\/span><\/h2>\n

Let us start with a <\/span>what is a consumer proposal<\/b><\/em> definition:\u00a0 A <\/span>consumer proposal<\/span><\/a> is a formal binding offer made to your creditors to settle your debt for less than the full amount owing.\u00a0<\/span><\/p>\n

To help you decide if a <\/span>consumer proposal<\/span><\/a> is the right option for you, I will provide answers to the most frequently asked questions I receive about what is a consumer proposal<\/em> in Canada.\u00a0<\/span><\/p>\n

What is a consumer proposal?<\/b><\/span><\/em><\/h2>\n

A <\/span>consumer proposal<\/span><\/a> is a government-regulated debt settlement program filed with a <\/span>Licensed Insolvency Trustee<\/span><\/a> (Trustee). The purpose of filing one<\/a><\/span>\u00a0is to get rid of problem debt so that you can start the process of rebuilding your credit debt-free.\u00a0<\/span><\/p>\n

It can only be filed with the <\/span>Trustee<\/span><\/a>. When you sign your documents, they are then filed with the federal government. It is a legal process under the <\/span>Bankruptcy and Insolvency Act <\/span><\/i><\/a>(Canada) (BIA).\u00a0\u00a0<\/span><\/p>\n

This process<\/span><\/a> is a legal agreement between you and your creditors to repay part of the debt that you owe.\u00a0 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.\u00a0 <\/span><\/p>\n

What is a consumer proposal<\/em>? 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.<\/span><\/p>\n

What is a consumer proposal<\/em>:\u00a0 Is it worth it?<\/b><\/span><\/h2>\n

I would say definitely yes. A successful <\/span>restructuring is<\/span>\u00a0binding 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.\u00a0<\/span><\/p>\n

What is a consumer proposal<\/em><\/span>?<\/span> This consumer proposal process<\/span><\/a>\u00a0is 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.\u00a0<\/span><\/p>\n

The Trustee’s motivation in a <\/span>consumer proposal <\/span><\/a>is to find a common sweet spot. A number is high enough that it is a better alternative for your creditors than your bankruptcy.\u00a0 A number that the creditors will likely accept yet still a number low enough that it is affordable for you to pay each month.\u00a0<\/span><\/p>\n

A <\/span>consumer proposal<\/span><\/a> 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<\/em>.<\/span><\/p>\n

What is a consumer proposal<\/em>? How do you qualify for one?<\/b><\/span><\/h2>\n

A <\/span>consumer proposal<\/span><\/a> 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.\u00a0\u00a0\u00a0<\/span><\/p>\n

You can file one if you are a person who owes $250,000 or less in unsecured debt.\u00a0<\/span><\/p>\n

The big difference between bankruptcy and <\/span>this kind of restructuring plan <\/span><\/a>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.\u00a0<\/span><\/p>\n

The <\/span>consumer proposa<\/span><\/a>l 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.\u00a0<\/span><\/p>\n

A <\/span>consumer proposal <\/span><\/a>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.\u00a0<\/span><\/p>\n

A <\/span>consumer proposal<\/span><\/a> does not deal with secured creditors. \u00a0 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.\u00a0 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.\u00a0 \u00a0That is what is a consumer proposal<\/em> is not.<\/span><\/p>\n

A proposal is an agreement made between the Trustee and your creditors.\u00a0 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.\u00a0<\/span><\/p>\n

For most people, a <\/span>consumer proposal<\/span><\/a> is a more attractive alternative to bankruptcy; however, it is still considered a form of the insolvency process.\u00a0 For Canadians seeking debt relief, it is an option for insolvent debtors that isn\u2019t 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.<\/span><\/p>\n

The Trustee acting in your <\/span>consumer proposal<\/span><\/a> acts as the Administrator.\u00a0 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 <\/span>consumer proposal <\/span><\/a>is fair and reasonable to the creditors and the debtor, and whether the consumer debtor will be able to perform it.<\/span><\/p>\n

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.\u00a0<\/span><\/p>\n

What is a consumer proposal<\/em>?\u00a0 What does it do to your credit?<\/b><\/span><\/h2>\n

Getting out of debt with a <\/span>consumer proposal <\/span><\/a>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.\u00a0 However, most clients see an improvement in their credit scores shortly after completing the program.\u00a0\u00a0<\/span><\/p>\n

For those who don\u2019t 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.\u00a0 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.\u00a0<\/span><\/p>\n

Once your <\/span>consumer proposal<\/span><\/a> is completed, you are in the next phase of taking control of your finances.\u00a0<\/span><\/p>\n

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.<\/span><\/p>\n

Payments in a <\/span>consumer proposal <\/span><\/a>are negotiated upfront. The duties required in a proposal are less than those in bankruptcy.\u00a0 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.\u00a0<\/span><\/p>\n

A consumer proposal<\/a> 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.\u00a0 Your monthly payment on your consumer proposal is remitted to your creditors once all applicable fees have been paid.\u00a0<\/span><\/p>\n

A consumer proposal will eliminate income tax owing<\/b><\/span><\/h2>\n

For spouses, if your debts are generally common, you can make a joint <\/span>consumer proposal<\/span><\/a>. If such a joint filing is made, the unsecured debt threshold increases to $500,000.\u00a0\u00a0<\/span><\/p>\n

A consumer proposal is the only method that can be used to negotiate a reduced balance owing to taxes to the Canada Revenue Agency.\u00a0 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.\u00a0<\/span><\/p>\n

Because each personal situation is unique, the benefit of what is a consumer proposal<\/em> 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.\u00a0<\/span><\/p>\n

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 <\/span>consumer proposal<\/span><\/a> 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.\u00a0<\/span><\/p>\n

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.\u00a0 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.\u00a0<\/span><\/p>\n

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.\u00a0<\/span><\/p>\n

Is a Consumer Proposal Right for You?\u00a0<\/b><\/span><\/h2>\n

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.\u00a0<\/span><\/p>\n

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.\u00a0\u00a0<\/span><\/p>\n

What is a consumer proposal good for?\u00a0 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.\u00a0<\/span><\/p>\n

Both bankruptcy and <\/span>consumer proposals<\/span><\/a> 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.\u00a0<\/span><\/p>\n

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.\u00a0<\/span><\/p>\n

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.\u00a0 A consumer proposal may be the best way to help you avoid bankruptcy and achieve real relief from your outstanding debts.\u00a0<\/span><\/p>\n

Each situation is different.\u00a0 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.\u00a0<\/span><\/p>\n

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.\u00a0 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.<\/span><\/p>\n

What is a consumer proposal<\/em> summary<\/b><\/span><\/h2>\n

I hope you found this Brandon\u2019s Blog about what is a consumer proposal<\/em><\/span> helpful.\u00a0 Sometimes things are too far gone and more drastic and immediate triage action is required.<\/span><\/p>\n

Do you have too much debt?\u00a0 Are you in need of financial restructuring? The financial restructuring process is complex.\u00a0 The <\/span>Ira Smith Team <\/span><\/a>understands how to do a complex restructuring.\u00a0 However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt.\u00a0 You are worried because you are facing significant financial challenges.\u00a0<\/span><\/p>\n

It is not your fault that you are in this situation.\u00a0 You have been only shown the old ways that do not work anymore.\u00a0 The <\/span>Ira Smith Team<\/span><\/a> uses new modern ways to get you out of your debt troubles while avoiding bankruptcy.\u00a0 We can get you debt relief freedom.<\/span><\/p>\n

The stress placed upon you is huge. We understand your pain points.\u00a0 We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional.\u00a0 The way we take the load off of your shoulders and devise a debt settlement plan, we know that we can help you.<\/span><\/p>\n

We know that people facing financial problems need realistic lifeline.\u00a0 There is no \u201cone solution fits all\u201d approach with the <\/span>Ira Smith Team<\/span><\/a>. That is why we can develop a restructuring process as unique as the financial problems and pain you are facing.\u00a0 If any of this sounds familiar to you and you are serious in finding a solution, <\/span>contact the Ira Smith Trustee & Receiver Inc. team today.<\/span><\/a><\/p>\n

Call us now for a free consultation. <\/span><\/a>\u00a0We 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.<\/span><\/p>\n

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What is a consumer proposal introduction\u00a0 Let us start with a what is a consumer proposal definition:\u00a0 A consumer proposal is a formal binding offer made to your creditors to settle your debt for less than the full amount owing.\u00a0 To help you decide if a consumer proposal is the right option for you, I […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[5,16,274,6,766,2,4053,94,863,4054,2853,990,4055,465,11,58],"class_list":["post-8847","post","type-post","status-publish","format-standard","hentry","category-brandon-blog-post","tag-bankruptcy","tag-bankruptcy-and-insolvency-act","tag-bia","tag-consumer-proposal","tag-consumer-proposal-canada","tag-debt","tag-how-do-you-qualify-for-consumer-proposal","tag-insolvency","tag-ira-smith-trustee","tag-is-a-consumer-proposal-right-for-you","tag-is-consumer-proposal-worth-it","tag-licensed-insolvency-trustee","tag-offical-receiver","tag-office-of-the-superintendent-of-bankruptcy","tag-trustee","tag-what-is-a-consumer-proposal"],"_links":{"self":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts\/8847","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/comments?post=8847"}],"version-history":[{"count":5,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts\/8847\/revisions"}],"predecessor-version":[{"id":9657,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts\/8847\/revisions\/9657"}],"wp:attachment":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/media?parent=8847"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/categories?post=8847"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/tags?post=8847"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}