Consumer Proposal In Toronto

Understanding the Consumer Proposal Process

Financial difficulties can arise at any time for many reasons. More often than not, engaging in consumer proposal services in Toronto can help you satisfy your creditor obligations without filing for bankruptcy.

Depending on your circumstances, the majority of your debts, up to and even over 90% of debts, in some cases, can be eliminated with an open payment arrangement extending for up to 5 years without creditors being able to charge additional penalties or interest.

Kunjar Sharma & Associates Inc. has successfully filed over 6,000 Consumer Proposals in Toronto. Our experience enables us to provide top-notch consumer proposal services in Toronto, helping you better understand the proposal process and how it will address your specific financial problems. 

We explain in simple terms: the time lines, flexibility of payment options (including early pre-payment) as well as the responsibilities imposed on a person who files a Consumer Proposal.

For comprehensive financial solutions, including assistance with Consumer Proposals, Mortgage Insolvency in Toronto, Corporate Proposals services, Personal Bankruptcy services in Toronto, and more, turn to our experienced team at Kunjar Sharma & Associates Inc.

Consumer Proposals are intended to help reduce the number of bankruptcy filings by allowing persons who owe less than $250,000 (excluding mortgages on their homes), to reduce their obligations based on what they can afford over an extended period of time. The procedure to be followed for Consumer Proposals in Toronto is quite simple and easily adapted to meet your needs.

Additionally, for those seeking guidance in managing their finances, Kunjar Sharma & Associates Inc. offers Credit Counselling Services in Toronto to assist in making informed financial decisions.

What is a Consumer Proposal?

A Consumer Proposal in Toronto is a legal process utilizing the provisions of the BIA, which provides a debtor or a bankrupt with an opportunity to reduce payments to creditors by extending the time for payment (up to 60 months)  without additional penalties or interest.  Executions, garnishes, and other actions by creditors will be stopped once the Consumer Proposal is filed.

Purpose

The Purpose of the Consumer Proposal legislation  is to give a debtor or a bankrupt an opportunity to make a settlement with creditors so as to avoid bankruptcy. Executions, garnishes, and other actions by creditors will be stopped once it is filed. Interest and penalties being applied to debts will also be stopped.

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The following warning signs may indicate you need the assistance of a Licensed Insolvency Trustee:

  • Calls from collection agents
  • High credit card debt
  • Being turned down for loans
  • Low Credit Score
  • Making only minimum monthly payments
  • Garnishment of paycheque or bank account

Who can make a Consumer Proposal?

  • To qualify to make a Consumer Proposal a debtor must owe between $1,000 and $250,000 (excluding the mortgages on a personal residence).  If the debts exceed $250,000, there are other provisions of the Act to deal with these debts.
  • An individual who has filed an assignment in bankruptcy may make a Consumer Proposal, (prior to discharge).
  • A second Consumer Proposal can be filed if a prior one was annulled (missed 3 payments) with a Court Order.
  • Two or more individuals may file a joint Consumer Proposal (e.g. married couple, common-law partners and people with common financial interests).

Major Steps in a Consumer Proposal

  1. Contact Kunjar Sharma & Associates Inc. ((KSAI) who will file your Consumer Proposal and communicate with your creditors.
  2. Creditors vote on the acceptance of the Consumer Proposal. 99% of our consumer proposals are approved.
  3. Once the Consumer Proposal is accepted, your obligation is limited to making regular monthly payments to KSAI who will in turn makes payments to the creditors according to the terms of the Consumer Proposal.
  4. You are required to attend two financial counselling sessions which can be held by video call or in-person. The purpose of the counselling sessions is to assist you with understanding financial budgeting and use of credit.
  5. Once you have fulfilled the terms of your consumer proposal, KSAI. will  provide you with a Certificate of Full Performance.  Any balance then still owing to the unsecured creditors is legally forgiven/eliminated.

How we do things differently!

  • Flexible payment plans that reflect your ability to pay.
  • Undischarged bankrupts, who filed with other LITs/Trustees, can file a consumer proposal with KSAI as a means of ending their bankruptcy.
  • Consumer proposals in default can be revived or a new proposal filed (even those filed with with another LIT/Trustee).
  • Debt obligations that arose after default in the consumer proposal  can also be addressed in a new consumer proposal.
  • Bankrupts subject to high conditional orders or high surplus income obligations can adjust their monthly payments to more manageable amounts by filing a consumer proposal.
  • Having a high equity in a property but being unable to refinance to pay debts due to your credit rating or financial situation can be addressed through a consumer proposal.
  • End costly vehicle financing contracts by surrendering the vehicle and including the financing shortfall in a consumer proposal.

How is a Consumer Proposal different / better than a bankruptcy?

  • Consumer Proposal avoids bankruptcy and any stigma associated with being a bankrupt.
  • Monthly payments under the Consumer Proposal are based on your income and budget not the Surplus income requirements set by Government Standards applied to bankruptcies (which can often be unaffordably).  Also, there is no change to your agreed upon proposal payment amount if your income in the future increases.
  • Personal assets that may be seized in a bankruptcy, such as RESP’s, your house or car can be protected.
  • You can be a director of a corporation, whereas in a bankruptcy scenario you are prevented from being a director of any corporation.
  • Once a Consumer Proposal is approved, you need only make the monthly proposal payments and attend counselling. There is no monthly reporting of income as is required in a bankruptcy.
  • Your credit rating can recover quicker in a consumer proposal.
More Details

The first step in the process is to contact a Trustee in our office. A Trustee is an individual or corporation who is licensed by the Government to administrator (the “Administrator”) bankruptcies and Proposals.

The Administrator, serving as a consumer proposal trustee in Toronto as well, will inform you of the effects of a Consumer Proposal and will prepare the necessary documents to file the Consumer Proposal with the Office of the Superintendent of Bankruptcy.

FAQ

If it is not accepted by creditors you can make changes to the proposal terms, such as offering a higher monthly payment or lengthening the term of the proposal to a maximum of 5 years to see if the additional funds will change creditor’s votes.

Other insolvency options can be discussed with your Trustee, including filing for bankruptcy.