Depending on your specific financial situation, there may be several different options.
Often people think the only solution to overcome financial debt is to file for a personal bankruptcy, however, consumer proposals are offered as an alternative solution. A consumer proposal is an agreement prepared with your Trustee (also known as your Administrator) to offer a settlement (i.e. less than full payment) to your creditors, when you are unable to afford your regular monthly debt payments. The filing of a proposal stops all legal action undertaken or contemplated by your unsecured creditors. It also creates breathing room so that creditors can be approached and the financial situation explained to them by your Trustee. Contact McLennan & Company Ltd. at their head office in London to see if you qualify for a consumer proposal.
Understand the differences between filing for a consumer proposal and bankruptcy and contact McLennan & Company Ltd. in London to book your free initial consultation with a trustee to understand which option is your best solution for your financial circumstances.
Often people contact insolvency trustees when it is too late, thereby limiting their options to a Proposal or Bankruptcy under the Bankruptcy and Insolvency Act.
A Consumer Proposal is an agreement prepared with your Trustee (also known as your Administrator) to offer a settlement (i.e. less than full payment) to your creditors, when you are unable to afford your regular monthly debt payments.
The filing of a consumer proposal stops all legal action undertaken or contemplated by your unsecured creditors. It also creates ‘breathing room’ so that creditors can be approached and the financial situation explained to them by your trustee. McLennan & Company, with a head office in London can help you understand if a consumer proposal is an option for you.
Bankruptcy is a legal process (similar to a Proposal) that provides immediate relief from your unsecured creditors when you can’t pay your debts and a Proposal is not affordable.
Call McLennan & Company Ltd. today to learn more about consumer proposals. We will create a customized solution for you.
Who can claim
|Your total debt cannot exceed $250,000 (excluding a mortgage) and you must have the ability to repay a percentage of your debts (e.g. 20% to 80%). However, the proposal must be accepted by a majority of your creditors based on dollar value.If your unsecured debt exceeds $250,000 you can then file a Division 1 Proposal.||Any person, who owes more than $1,000 in debt, is eligible to file a personal bankruptcy in Canada, however, most people have a significantly higher debt level. Bankruptcy is usually the last alternative, and often when a Proposal is not affordable.|
|Once you and your creditors agree to a proposal amount, your monthly payment is usually fixed and remains the same until the proposal is completed.||Monthly payments may vary as they are based on your income. The more you earn, the more you will be required to pay based on Guidelines. Also, high income earners may be bankrupt for a longer period.|
|Assets are usually not part of a Proposal.||Many assets are either exempt and/or fully secured by creditors (e.g. car loans, house mortgages); however, some assets are realizable in a Bankruptcy.|
|When the Proposal is completed, the debts are allocated an R7 credit rating for three more years. This is a better rating than a bankruptcy R9.||After your discharge from Bankruptcy, you will receive an R9 credit rating for 6 years on the debts written off and it remains on your credit report for 14 years if this is your second time filing Bankruptcy.|
|You have no monthly tasks or reporting.||You are required to complete a monthly budget for all income and expenses, as well as supply copies of your pay stubs to your trustee.|
|You are still entitled to all tax refund(s) and/or credits which you are owed, unless you have made it part of your Proposal.||You will lose all tax refund(s) and/or credits which you are owed for the year of Bankruptcy and any prior years.|