- What is a consumer proposal?
- Benefits of a consumer proposal
- Who can do a consumer proposal?
- How does it affect my family/spouse?
- What do I have to do?
- Who can administer a consumer proposal?
- How will it affect my credit rating?
- Can I re-establish my credit?
- Can I have a credit card?
- What about my house/car?
- What does it cost?
- How do the payments work?
- What debts can be included in a proposal?
- What if I win the lottery?
What is a consumer proposal?
A proposal is a deal you make with your creditors only through a Trustee. You offer to pay a portion of your debts over an extended period in a single monthly payment based on what you can afford. When it is finished, all your obligations for those debts are legally released.
Benefits of a consumer proposal?
- you only pay a percentage of all your debts
- 0% interest
- it is open, so you can pay it sooner if you choose without penalty
- you get to keep the things you own
- the credit rating on your record is better than in a bankruptcy
- no additional fees
- fees are regulated by law
- it stops all lawsuits, wage garnishments, asset seizures and collection efforts
- you avoid a bankruptcy
Who can do a consumer proposal?
If your debts are over $1,000, are more than you own, and if you can afford a reasonable monthly payment to pay a portion of your debts, you can file a proposal. You must have less than $250,000 in unsecured debts (credit cards, lines of credit, retail cards etc.) not including your mortgage or secured car loan, for example.
How does it affect my family/spouse?
Your proposal is an individual action – it will not affect the credit rating of your spouse or your family.
What do I have to do?
Your first step is to call us at Cooper & Co. 416-665-3383. We can arrange a free initial consultation (about an hour long) in which we will sit down with you, review your financial situation and lay out your options for you. You will leave knowing what you can do about your debts.
Who can administer a consumer proposal?
Only a licensed Trustee in bankruptcy can administer a Consumer Proposal. Be careful – there are debt consultants who will tell you you can do a proposal and then refer you to a Trustee, anyway – for a large fee. Save yourself that fee and just call us directly to see if a proposal is right for you. 416-665-3383
How does it affect my credit rating?
You will get a credit rating of R7 on your record for only three years maximum after the proposal is complete (compared to a worse rating of R9 for 6 years in a basic bankruptcy).
Can I re-establish my credit?
Yes! You can get a secured credit card, and as long as you keep the balances low and pay the balance off every month, you will get a good rating for each time you do so. Your proposal will still show on your record, but paying back a secured card shows that you are now paying back balances faithfully and that looks good on a credit report. You can usually expect to be able to get actual credit back within 6 -18 months after a proposal ends.
Can I have a credit card?
You are free to have a secured credit card, but you will have to surrender all credit cards and cannot have new ones until the proposal is complete.
What about my house/car?
In a proposal you are allowed to keep your assets, including your house and any cars.
What does it cost?
It depends on a few factors, but you can estimate it roughly by using our Debt Repayment Estimator (link to chart).
How do the payments work?
You make your monthly payments to the Trustee. These go into the trust account and are distributed out to the creditors based on what you owe each of them proportionally. You get quarterly reports from us on how much you have paid to date, where the funds have gone and how much is left to pay.
What debts can be included in a proposal?
All unsecured debts:
- Credit card balances
- Lines of credit
- Personal loans
- Retail cards (Future Shop, the Bay etc.)
- Bank account overdrafts
- Payday loans
- Utility balances owing
- Personal income tax owing
- Student loan balances (must be out of school more than 7 years)
- Shortfalls on secured loans
What if I win the lottery?
If you win the lottery during your proposal, you can keep the money. You can pay your proposal off if you choose, but you would still only need to pay off the amount agreed on.