At S.Funtig & Associates, we take pride in seeing the need to educate individuals on the possibilities available to them to deal with their specific financial situation. Below is some information on what a consumer proposal is and how it can be useful to you.

What is a Consumer Proposal?

If you’re struggling with debt in Ontario, a consumer proposal may be a viable alternative to bankruptcy. Here’s what you need to know about consumer proposals:

What is a Consumer Proposal?

A consumer proposal is a formal, legally binding agreement between you and your creditors to repay a portion of your debts over a period of time, usually up to five years. This proposal is typically made through a licensed insolvency trustee, who will work with you to create a proposal that is affordable and realistic based on your income and expenses.

Who is Eligible for a Consumer Proposal?

To be eligible for a consumer proposal in Ontario, you must have debts of $250,000 or less (excluding mortgage debt) and be unable to meet your debt payments as they come due. You must also be a resident of Canada, or have a business or assets in Canada.

How Does a Consumer Proposal Work?

Once you file a consumer proposal, your creditors will be notified and have 45 days to vote on whether to accept or reject the proposal. If the majority of your creditors accept the proposal, it becomes legally binding for all of your creditors, even those who voted against it.

Under the terms of the proposal, you will make monthly payments to your licensed insolvency trustee, who will distribute the funds to your creditors. Once you have completed all of the payments, your remaining debts will be discharged, and you will be debt-free.

What Are the Benefits of a Consumer Proposal?

One of the main benefits of a consumer proposal is that it allows you to avoid bankruptcy, which can have a significant impact on your credit score and financial future. Consumer proposals also offer the following benefits:

• Reduced debt: You will only be required to pay a portion of your debts, which can help you become debt-free faster.

• Stop collection calls: Once your proposal is accepted, your creditors will be required to stop all collection activities against you.

• Protect your assets: Unlike bankruptcy, you will be able to keep your assets, such as your home and car, as long as you continue to make the agreed-upon payments.

How Can S.Funtig and Associates Help?

At S.Funtig and Associates, we understand that consumer proposals can be a complex and overwhelming process. Our licensed insolvency trustees have years of experience helping individuals and businesses in Ontario overcome their financial difficulties through consumer proposals. Contact us today to learn more about how we can help.

Steps in the Consumer Proposal Process

If you’re considering a consumer proposal to help you manage your debts, it’s important to understand the steps involved in the process. Here’s a breakdown of the consumer proposal process in Ontario:

Step 1: Consult with a Licensed Insolvency Trustee

The first step in the consumer proposal process is to consult with a licensed insolvency trustee. This initial consultation is free and confidential. During this meeting, the trustee will review your financial situation and determine if a consumer proposal is the right solution for you. Below are some documents that will be helpful to have filled out before your initial interview.

Application Checklist

Consumer-Debtor Application

Step 2: Develop a Proposal

If a consumer proposal is the right solution for you, the next step is to develop a proposal. Your licensed insolvency trustee will work with you to develop a proposal that is affordable and realistic based on your income and expenses. This proposal will outline how much you are willing to pay your creditors and over what period of time.

Step 3: Submit the Proposal to creditors

Once your proposal has been developed, your licensed insolvency trustee will submit it to your creditors. Your creditors will then have 45 days to vote on whether to accept or reject the proposal and or call for a meeting.  If the majority of your creditors at the meeting of creditors vote to accept the proposal, it becomes legally binding for all of your creditors.

Step 4: Make Payments

Once your proposal has been accepted, you will begin making monthly payments to your licensed insolvency trustee. The trustee will then distribute these payments to your creditors based on the terms of the proposal.

Step 5: Complete the Proposal

Once you have made all of the payments outlined in the proposal, you will have successfully completed the consumer proposal process. Your remaining debts will be discharged, and you will be debt-free.

Step 6: Credit Counselling

As a condition of your consumer proposal, you will be required to attend two credit counselling sessions. These sessions are designed to help you develop the financial skills necessary to avoid future financial difficulties.

Step 7: Monitor Your Credit Report

After you have completed your consumer proposal, it’s important to monitor your credit report to ensure that your debts have been properly discharged. If you notice any errors or inaccuracies on your credit report, contact your licensed insolvency trustee immediately. Below are some resources for monitoring your credit report.

Equifax

TransUnion

How Can S.Funtig and Associates Help?

At S.Funtig and Associates, we understand that the consumer proposal process can be complex and overwhelming. Our licensed insolvency trustees have years of experience helping individuals and businesses in Ontario overcome their financial difficulties through consumer proposals. Contact us today to learn more about how we can help.

FAQs About Consumer Proposal

If you’re considering a consumer proposal to help you manage your debts, you likely have a lot of questions. Here are some of the most frequently asked questions about consumer proposals in Ontario:

Q: What is a consumer proposal?

A: A consumer proposal is a legal process that allows you to negotiate with your creditors to pay back a portion of your debts over an extended period of time. It’s a formal alternative to bankruptcy that is designed to help you get out of debt while protecting your assets.

Q: Who is eligible for a consumer proposal?

A: Anyone who has debts of $250,000 or less (excluding mortgages on their principal residence) is eligible to file a consumer proposal. However, it’s important to note that a consumer proposal may not be the best solution for everyone, and you should consult with a licensed insolvency trustee to determine if it’s right for you.

Q: How does a consumer proposal affect my credit score?

A: A consumer proposal will have a negative impact on your credit score, but the impact is generally less severe than that of bankruptcy. A consumer proposal will remain on your credit report for three years after it is paid in full or six years after the date it was filed, whichever comes first.

Q: Will I lose my assets if I file a consumer proposal?

A: No, you will not lose your assets if you file a consumer proposal. Consumer proposals are designed to help you get out of debt while protecting your assets, such as your home, vehicle, and retirement savings.

Q: How long does a consumer proposal last?

A: A consumer proposal typically lasts between three and five years, depending on the terms of the proposal. During this time, you will make monthly payments to your licensed insolvency trustee, who will distribute the funds to your creditors. Some proposals provide for the early completion of a proposal provided the total payments are made.

Q: Can I still use credit while in a consumer proposal?

A: It is possible to obtain credit while in a consumer proposal, but it can be difficult. Most lenders will view you as a higher risk and may require a co-signer or collateral. It’s important to note that obtaining credit while in a consumer proposal may also prolong the repayment period and increase the total cost of the proposal.

Q: What happens if I miss a payment?

A: Once your consumer proposal has started, if you miss three (3) payments the consumer proposal is annulled and all legal rights of the creditors are restored. The amount that you owe each creditor is the original amount that you started with less any monies that the creditors received during the consumer proposal before you missed the three (3) monthly payments.  The 3 payments are cumulative – you can miss 2 payments and make one up.  3 payments refers being behind 3 payments in total at any time.

If you find that your financial situation has changed, contact your trustee immediately.  It may be possible to amend your consumer proposal by reducing your monthly payments to fit your new circumstances.

Q: What happens if my proposal is annulled?

A: You essentially go back to the beginning, your total debt will be the original amount along with all fees and interest, the funds paid will be distributed to your creditors so you will not get it back, you will not be protected from your creditors and your creditors can report defaulted payments.

Q: How do I get started with a consumer proposal?

A: The first step in the consumer proposal process is to consult with a licensed insolvency trustee. At S.Funtig and Associates, we offer a free initial consultation to help you determine if a consumer proposal is the right solution for you. Contact us today to learn more.