IMPORTANT FACTS ABOUT FILING CONSUMER PROPOSALS
When faced with financial difficulties, many in Ontario do not know their options. A popular belief is that one must always declare bankruptcy if they are unable to manage their debts or are unable to pay their bills. This is not, however, always the case and bankruptcy is often not necessary. Those with money problems, too much debt, or are struggling to pay their bills may be able to avoid bankruptcy by using a consumer proposal to resolve their debt.
At BDO Newmarket, we know people are trying to pay their bills. They just often need a little more time and assistance. That is where our team can help you, right in your town or city in Ontario (see our nearby locations) to explore your alternatives to filing for bankruptcy. The consumer proposal is one option, as it gives you the time and terms you need to pay all, or some, of your debts, while protecting your assets and preventing bankruptcy.
A Consumer Proposal is a legally binding agreement that you make with your creditors to settle the debt amount you owe in a time period that is possible for you. The proposal often allows you to negotiate to repay less than the full amount owed. Since it is legally binding, your creditors will stop harassing you, stop garnishing your wages, and will stop all other actions against you.
In a typical proposal you would make one monthly payment (for all of your debts), over a period of no more than 5 years with no interest or penalties and no additional fees for the trustee. Those payments are then distributed by a trustee to your various creditors. Once you have made the final payment, your debts are eliminated and you will not have had to declare bankruptcy. Use our debt calculators on this website to calculate an estimate of monthly payments based on your situation.
Better yet, click here to arrange a FREE consultation with our supportive and professional team. We’re here to help and to restore your peace of mind and we can quickly advise if a Consumer Proposal is your best alternative.
Benefits of a Consumer Proposal
- Debt consolidated into one manageable monthly payment.
- Negotiate to repay only a portion of your debt.
- Extend the time for re-payment up to a maximum of five years.
- Freeze interest at the date you file.
- Stop creditors from taking any legal action.
- Stop wage garnishments.
- Protect your assets (car, home, RESPs).
- Avoid bankruptcy.
- No fees other than your monthly payment.
Who can file a Consumer Proposal?
To file a consumer proposal you must owe between $1,000 and $250,000 (excluding the mortgages on your house) and you must be able to repay a portion of your debts. In some cases, it may even be possible for you and your spouse to file your Consumer Proposal together, increasing the amount owing to $500,000 . You can even file a Consumer Proposal if you have already declared bankruptcy.
A Consumer Proposal can reduce monthly payments
Example: Mary owes $25,000 and wants to pay it off in 5 years; here is her monthly payment schedule with a Consumer Proposal, compared to other debt repayment options.
| Mary's Consumer Proposal | Credit Counselling | Debt Consolidation Loan | Do-it yourself budgeting | |
|---|---|---|---|---|
| Monthly payment | $125.00 | $458.88 | $734.67 | $994.34 |
| Terms | Pay back 30% of original amount owed | Pay back debt in full with no interest; plus a 'fair share fee' equal to 10% of debt | Pay debt in full at 12% interest; compounded annually | Pay back debt in full; 19% interest compounded annually |
| Repayment period | 5 years | 5 years | 5 years | 5 years |
More about Consumer Proposals
Learn more about Consumer Proposals, read Understanding Your Options.
A Consumer Proposal is just one of the debt help solutions offered by BDO. You can also speak to us about other debt management options including financial counselling or bankruptcy filing.
More people chose BDO (*Source: OSB statistics) to help them resolve their debt and money difficulties. If you think a consumer proposal is the right choice for you, contact on one our licensed consumer proposal administrators today for a FREE consultation. With offices throughout Ontario and Canada, we are your trusted consumer proposal, bankruptcy and debt management specialist. Click on our Locations to find an office in your town or city. Let us give you peace of mind and get you back on the road to financial stability.