Filing a consumer proposal in Ontario
Insolvency is never that far away – with debt loads going up across Canada, more and more people are at risk of becoming insolvent (more debts than assets – owing more money than they can afford to pay). It can happen to anyone, especially if your expenses outpace your income due to unforeseen circumstances like illness, divorce, or job loss. There’s no shame in becoming insolvent, it’s a reality that more and more people face every day.
For many, there just isn’t enough money to meet all of your obligations, and you can become insolvent. That doesn’t mean that bankruptcy is your only way out, though; if you owe less than $250,000, not including your mortgage, you can file a consumer proposal in Ontario instead. Only a Licensed Insolvency Trustee like David Sklar & Associates can file consumer proposals to Ontario creditors.
A consumer proposal in Ontario will be presented to all your unsecured creditors, who will vote on the proposal. An unsecured creditor is a lender who does not have any collateral from you; they could be a credit card company, a utility, a payday lender, a bank that has issued a business loan or a line of credit, or an individual who has lent you money. A secured creditor has collateral, and they include mortgage lenders and banks or car dealers that have given you credit for a car. They are not included in a consumer proposal because they can seize the asset if you fail to make payments. Part of the benefit of a consumer proposal in Ontario is that it can give you room to pay your secured creditors, helping you keep your house or car.
As for your unsecured creditors, when an Ontario consumer proposal is presented to them, if the majority agree to it, all creditors are bound to it. They are not obligated to agree, but most of the time they will, because they are more likely to recover their loans through a consumer proposal than if you declare bankruptcy and surrender your assets. A consumer proposal lasts longer than bankruptcy (up to 5 years), but even during bankruptcy, you can be required to make monthly payments toward your debt. A consumer proposal is a simplified, expedited way for you to pay your debts and your creditors to recover them.
When you find yourself unable to meet your debt obligations, consult with a Licensed Insolvency Trustee like David Sklar & Associates and find out how you can file a consumer proposal in Ontario. Consumer proposals protect Ontario debtors from bankruptcy by renegotiating the amount you owe your creditors and the time you have to pay them. Get in touch withLicensed Insolvency Trustees like David Sklar & Associates in Toronto, and you can reduce the debt you owe and stop action such as garnishes on your wages, collection calls, and other legal action. It can also give you financial breathing room to pay “secured creditors,” i.e., your mortgage. Get your life back together and start paying down your debts at a pace you can afford.