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If personal bankruptcy does not appeal to you, and you are looking for another option, you may want to consider filing a Consumer Proposal – one of the most popular bankruptcy alternatives in Saskatoon, Saskatchewan. Consumer proposals are the second most popular option for individuals who are having financial problems.
Consumer Proposal Basics
The purpose of a consumer proposal is to give a debtor an opportunity to make a settlement with his/her creditors while avoiding bankruptcy. In many instances it may be possible for debtors to make proposals to their creditors for a reduction or extension of their debts.
Consumer proposals are designed to allow a debtor to deal with their unsecured debts. These debts include things like credit cards, personal loans, lines of credit, and income taxes. Only in certain circumstances are secured debts (mortgages, car loans) included in a proposal.
Advantages of Filing a Proposal to Creditors
Advantages of consumer proposals include:
- Frozen interest
- A maximum period of 5 years
- Wage garnishments stop
- Normally accepted by creditors (they’d receive even less if you filed for bankruptcy)
- Deals can be made to pay back only a fraction of the debt
- Creditors are “stayed” – cannot take legal action against you
The Role of a Bankruptcy Trustee in a Consumer Proposal Process
Before beginning a consumer proposal process, it is crucial that you consult a bankruptcy trustee in Saskatoon. The trustee will review your financial situation, help you determine if a consumer proposal is right for you, and will ultimately carry out the proposal.
Filing a Consumer Proposal
Once your trustee has determined the amount you can afford to pay back each month, and your creditors have agreed on the numbers, the trustee will file the proposal for you.
Under the Bankruptcy Insolvency Act, your creditors have 45 days to vote on the proposal. If more than 50% vote for the proposal, it is deemed acceptable by all. If there are no objections, the proposal will be approved within about 15 days. It is mandatory that all creditors be included in the proposal.
If more than 25% of your creditors do not agree on the proposal, the trustee will call a meeting of creditors – which you must attend as well. The trustee will assist you and your creditors in coming to an agreement over the proposal.
You are allowed to miss up to two payments during the proposal, and two payments will just be added to the end. However, if you miss more than two, the proposal collapses and is annulled by the court. Your creditors may then appeal to have your wages garnished, and interest is added to all debts from the day you filed.
You must be prepared for the effects on your credit rating when filing a proposal. The credit rating will be altered to reflect your current financial situation, and a note will appear on the report for up to seven years.
The amount you would be required to pay during a consumer proposal would be determined by family size, monthly income and assets. Trustee fees are determined by the Superintendent of Bankruptcy, and usually come out of the proceeds of the proposal.
If you are considering a consumer proposal, or would like to know more about other available bankruptcy alternatives in Saskatoon, please contact our experienced trustees in Saskatoon today. Deloitte and Touche Inc. is the largest bankruptcy firm in Saskatchewan, with 5 expert trustees. By calling us today you may receive a free consultation within the next 24 hours.
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