At S. Funtig & Associates Inc. we take pride in seeing the need to educate individuals on the possibilities available to them to deal with their specific financial situation.
Ultimately an assessment of an applicant’s income, assets and liabilities determines the direction a debtor would pursue in the case of being insolvent. When all avenues have been exhausted to deal with debts including consolidation loans, restructuring the budget and even attempting to take on another job, you are left with two options, Bankruptcy or a Proposal to your creditors.
A Consumer Proposal is a legally binding agreement between the debtor and their creditors for an extension of time, or an arrangement or method of repayment to their creditors generally, by an administrator through the services of a licensed Trustee.
Today Consumer Proposals make up an increasing portion of insolvency proceedings in Canada and continue to be the preferred selection in dealing with debt. The process allows debtors to propose an arrangement with their creditors which is to be completed within five years or less. A Consumer Proposal may only be made by a “natural” person who does not owe more that $250,000 in aggregate debts (excluding any debts secured by an individual’s principal residence).
The amount and terms of the Consumer Proposals are determined by the applicant and the advisor. The Consumer Proposal must be reasonable and should generate an enhanced payment to creditors compared to the payment creditors would receive if an assignment in bankruptcy had been filed. Consumer Proposals are voted on by the creditors and are typically accepted or amended.
A Division 1 Proposal is different than a Consumer Proposal and may be made by an insolvent company or individual proposing an arrangement which is not restricted to be completed in five years. A Division 1 Proposal is more extensive than a Consumer Proposal requiring additional documentation, reporting and administration.
Once a Consumer Proposal is approved, applicants can avoid bankruptcy, retain their assets and are protected from unsecured creditors taking action for collection of debts (Stay of Proceedings). Once all of the terms of a proposal have been completed, the consumer debtor receives a Certificate which has the same effect as a discharge from bankruptcy.