- Whats is a Proposal?
- Can I keep my house or vehicle if I file a Proposal?
- Will a Proposal affect my credit rating?
- Who can file a Proposal?
- How much should I offer my creditors in a Proposal?
- Can I borrow again after filing a Proposal?
- What is the difference between Bankruptcy, Proposals and Credit Counselling?
- How does Credit Counselling differ from Proposals?
Whats is a Proposal?
A Proposal is an alternative to bankruptcy and once accepted by creditors, it becomes a binding contract.
A Proposal is a formalized approach to attempt to settle with your creditors. It may consist of a plan to pay your debts in full over a period of time with one monthly payment and no further interest or penalty. If may also consist of a plan to pay a portion of your debts over a period of time with one monthly payment. There are many options available to explore when considering a Proposal, so for more information please contact our office for further details.
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Can I keep my house or vehicle if I file a Proposal?
Yes. If you have a house secured by a mortgage or a financed vehicle you can keep them as long as your payments towards these assets are up to date and remain current.
Will a Proposal affect my credit rating?
The fact that you filed a Proposal will remain on your credit report for three years upon completion versus bankruptcy, which will remain on your credit report for six years upon discharge.
Who can file a Proposal?
A Consumer Proposal can be filed by an individual whose debts, (excluding a mortgage on a principal residence) do not exceed $250,000.
A Consumer Proposal must be completed within five years.
A Division I Proposal may be filed by either an individual or a corporation. There are no limits on debt or time frame.
How much should I offer my creditors in a Proposal?
As a general rule, your Proposal should offer creditors more than they would likely receive in a bankruptcy. There is no magic number and every situation is different. For more information, please contact our office to schedule a consultation.
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Can I borrow again after filing a Proposal?
Yes. Like bankruptcy, you can begin to re-establish credit once you have completed your Proposal. For more information on how to re-establish credit after completing your Proposal or bankruptcy, place contact our office to schedule a free consultation.
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What is the difference between Bankruptcy, Proposals and Credit Counselling?
The difference between Bankruptcy, Proposals and Credit Counselling are outlined in the following chart:
|
|
Trustee in Bankruptcy |
Administrator
of a Proposal |
Credit
Counselling |
|
Has the ability to stop action by creditors |
√ |
√ |
X
|
|
Can help arrange a repayment plan |
√ |
√ |
√ |
|
Can stop interest/penalty charges |
√ |
√ |
X |
|
Licensed and Certified |
√ |
√ |
X |
|
Government Regulated |
√ |
√ |
X |
|
Can negotiate with creditors to reduce amounts owed |
√ |
√ |
X |
How does Credit Counselling differ from Proposals?
Credit counselling agencies cannot provide a guarantee that the amount you owe will be reduced, interest will be stopped, or that creditors will stop calling or sending letters. Arrangements with credit counselling agencies are not legally binding, and will appear on your credit report for three years upon completion.
Credit counselling agencies also derive a large portion of their income by charging you fees on top of your total debt load and often receive rebates from the creditors that you owe. Credit Counselling agencies are not regulated by the government and in many provinces are registered as collection agencies.
Filing a Consumer Proposal or Division I Proposal will stop interest, harassment from creditors, and has the ability to reduce the amount you owe. A Proposal is administered by a licensed Trustee bound to government regulation and once accepted by creditors, becomes a legally binding contract. A Trustee’s fees are subject to government tariffs and regulation and the Trustee does not receive any additional income or payment from your creditors.