Consumer Proposals in Etobicoke
Find out what you need to know and what to look out for.

Consumer Proposal Etobicoke, Ontario – Other Options & Stuff You Need to Know

What is a consumer proposal, and is it my best option?

If you are looking to consolidate your debts, one option available is to file a Consumer Proposal in Etobicoke. This is a legal process governed by the Bankruptcy and Insolvency Act between yourself and your creditors to pay back a portion of the debt you owe. The amount of debt that you repay is mainly based on your income and what assets you own.

A Consumer Proposal can only be setup by a bankruptcy trustee and costs around $1,500. You’ll pay an initial setup fee, and if it is accepted by your creditors, you will pay the balance to proceed. In addition, the trustee will keep 20% of your future payments as your Consumer Proposal administration fee. For the proposal to be legally binding, the creditors who own the majority of your debt must agree to the arrangement. If they do, then you will be required to repay the agreed upon amount over a maximum term of 5 years.

Advantages and Disadvantages of Filing for a Consumer Proposal

There are some clear advantages and disadvantages of filing for a Consumer Proposal. They include the following:

Advantages

  • It can substantially reduce the amount of debt you are required to pay your creditors
  • It can be an effective way of consolidating debt in Etobicoke, Ontario if:
    • You can’t afford to repay all of what you owe
    • You have stable income
    • You have enough money in your budget to make monthly payments
  • It will pause active collection on student loan payments
  • Can be a good option if:
  • It is one of the last ways to avoid bankruptcy

Disadvantages

  • It’s not a private matter. A Consumer Proposal is filed as a permanent public record and is included on a searchable database
  • It costs more than filing for bankruptcy
  • The Court must approve it
  • Creditors can choose to reject the proposal. If they do, you may need to offer them additional funds to convince them to proceed
  • You might need to sell some of your assets (such as a vehicle, your home, or investments)
  • You may need to file for bankruptcy if you miss more than 2 payments
  • Secured debts cannot be put into a proposal
  • Student loans less than 7 years old can’t be included
  • It can put certain professional licenses at risk, and the permanent record of your insolvency may also affect some future employment opportunities

There’s a Way Out of Debt with Help

“I had just come to the point where I had given up hope – that there’s no way I could ever repay my debt. A friend of mine suggested I reach out, and I thought I’d get some condescending person on the phone lecture me about money, but my counsellor was the most compassionate, caring person who became sort of my own personal cheerleader.”

– Charis, Actual Client

Watch Out for the Big Debt Rip-Off

Consumer Proposals have become the newest way for a growing number of companies and their sales people to take advantage of unsuspecting, vulnerable Canadians. Don’t let this happen to you! A lot of companies offering debt relief are now claiming to provide Consumer Proposals as a great way of getting out of debt. But there’s a problem. Only a government licensed bankruptcy trustee is permitted to file paperwork for a Consumer Proposal. These debt relief companies bill people for thousands in fees only to refer them to a bankruptcy trustee who then charges his or her own fees.

How to Keep from Getting Ripped Off

Follow the tips outlined below, but start by speaking to a member of Credit Counselling Canada (a national association of non-profit credit counselling organizations who don’t work on commission). If a Consumer Proposal is a truly good option for you, one of their agencies will inform you and refer you to a reputable bankruptcy trustee for free.

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Talk to a Not-for-Profit Credit Counsellor

Speak with a non-profit Credit Counsellor about your financial situation first. They will be able to review your situation with you and help you explore and understand all your options to deal with your debt.
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Only Pay a Trustee for Consumer Proposal Services

Never hand over money to anyone for Consumer Proposal services except a government licensed bankruptcy trustee. The law states that only they are allowed to offer and get paid for these services.
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Watch Out for Consultants on Commission

Ask how the person helping you is compensated. Many people who will seek to advise you on your debts work on commission. Make sure the “solution” they are suggesting is in your best interest – not theirs.

How a Consumer Proposal Can Impact Your Credit

Once you begin making payments on a Consumer Proposal, a note is placed in the public records section of your credit report that states that you have filed a proposal. Anyone who you have given permission to see your credit report can also see the public records section.

Your creditors may also report a “7” rating on any debt included in your proposal. This rating indicates that they are receiving your payments through a third party. In this case, your trustee is the third party. Your monthly payment on your Consumer Proposal is remitted to your creditors once all applicable fees have been paid.

If you are making monthly payments to secured creditors (like paying for a vehicle loan) outside of your Consumer Proposal, those debts will be reported separately by the creditors that you are paying. If you can create and stick with a realistic budget, then it should make this easier.

If you are able to keep up a good payment history on any secured debts while you are paying off your proposal, this can assist you in re-building your credit more quickly afterwards.

Contact Us for More Information About Filing for a Consumer Proposal in Etobicoke, Ontario

There are quite a number of options between financial difficulty and bankruptcy. A Consumer Proposal might be one good option for some people, but it’s not the best option for everyone. To find out what other options you have, speak with one of our professionally trained Credit Counsellors today, in person or over the phone. Our appointments are free, non-judgmental, and completely confidential.

To ask us some questions or to make an appointment to speak with a Counsellor, phone us in Etobicoke at 647-776-0485. You can also email or chat with us online right now.

Office Serving Etobicoke: 425 Bloor Street East, Suite 520, Toronto, ON M4W 3R4

Phone: 647-776-0485

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Putting Your Interests First

Our goal is to always put consumers first and look out for their best interests in everything we do. One way we do this is through transparency and accountability. We are held accountable to the most rigorous standards in our industry.

Certified by Great Places to Work Canada
Accredited by Canada’s national association of non-profit credit counselling organizations.
North America’s largest association of non-profit credit counselling organizations.
Accredited by the Better Business Bureau.

Related Links

 

The Credit Counselling Society is a leading, non-profit credit counselling service provider in Etobicoke, Ontario with locations across Canada.

Our office that serves Etobicoke also offers consumer proposal information in Mississauga, Toronto, Alderwood, Eatonville, Richview, Rexdale, York, Oakville, and Greater Toronto Area.