What is consumer proposal in Ontario?

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In Ontario, a consumer proposal is like a handshake deal with your creditors, avoiding bankruptcy. Under the Bankruptcy and Insolvency Act, you propose a plan to repay part of your debt over five years without interest. Your Licensed Insolvency Trustee acts as your coach, so choose one you can trust. You must owe between $1,000 and $250,000 in unsecured debt. Licensed Insolvency Trustees are paid by creditors and lenders, meaning they don’t work for Canadians in debt. Some may double bill or charge additional fees. Be aware! Reach out by phone, text, or live chat if you have questions.

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What A Consumer Proposal In Ontario Is Question

What is consumer proposal in Ontario? I know there are provincial differences, so I’m curious about the specific rules or processes for consumer proposals in Ontario.

From: Anonymous Question
Location: Mississauga, Ontario (ON)
Category: consumer proposal

What A Consumer Proposal In Ontario Is Answer

A consumer proposal in Ontario is like a friendly handshake deal between you and those you owe money to. It’s your way of saying, “Hey, let’s figure this out together without taking the bankruptcy route.” With the federal Bankruptcy and Insolvency Act keeping things fair, you can lay out a plan to tackle a chunk of your debt over up to five years. You’ll have a Licensed Insolvency Trustee on your team, kind of like your personal coach, to look at your financial playbook, set up the proposal, and chat with your creditors. To jump into this game, you should owe somewhere between $1,000 and $250,000 in unsecured debt, and the best part? No pesky interest to worry about! Sure, this can affect your credit score and there are asset implications, much like going bankrupt, but Ontario’s rules are pretty much the same across the board in Canada. Just make sure you pick a trustworthy trustee who’s got your back for a smooth and successful proposal.

From: Insider Adam

Office of the Superintendent of Bankruptcy (OSB) Answer

A consumer proposal in Ontario is a formal process defined under the Bankruptcy and Insolvency Act (RSC 1985, c 11). It allows individuals to make a proposal to creditors to pay back a portion of their debts over a specified period of time, typically up to five years. This process is overseen by a Licensed Insolvency Trustee.

Key points include:

1. Eligibility: Individuals can propose a consumer proposal if their unsecured debts do not exceed $250,000 (excluding the value of their principal residence) (Bankruptcy and Insolvency Act, Section 66.11).

2. Proposal Process: The process begins when an individual files a proposal to the Office of the Superintendent of Bankruptcy. The proposal must include terms detailing how much the debtor intends to pay and the timeframe (Bankruptcy and Insolvency Act, Section 66.1).

3. Creditor Approval: Creditors must accept the proposal for it to be binding. A meeting of creditors is convened if necessary, and the majority of creditors (by dollar value) must approve the proposal (Bankruptcy and Insolvency Act, Section 66.12).

4. Consumer Protection: Filing a proposal offers protection from creditor actions, including wage garnishments and lawsuits, once filed (Bankruptcy and Insolvency Act, Section 69).

5. Discharge: If the proposal is accepted and payments are completed as agreed, the debtor is granted a discharge from the remaining debts covered by the proposal (Bankruptcy and Insolvency Act, Section 66.34).

For further details, refer to the Bankruptcy and Insolvency Act, particularly Sections 66.1 to 66.34.

From: OSB Helper

Related Questions to Consumer Proposal In Ontario

Here are the top 5 most frequently asked questions related to consumer proposals in Ontario, based on the provided sources and general online trends:

1. What are the eligibility requirements for a consumer proposal?

You must owe between $1,000 and $250,000 in unsecured debts, have a stable income, be a resident or have assets in the province, and meet other specific criteria[1][3][5].

2. How long does a consumer proposal stay on my credit report?

A consumer proposal remains on your credit report for either 3 years after completion or 6 years from the filing date, whichever comes first[1][3][5].

3. What are the benefits of filing a consumer proposal?

Benefits include keeping your assets, making one lower monthly payment, avoiding bankruptcy, and receiving creditor protection and court approval[1][2][5].

4. Can I leave a creditor out of my consumer proposal?

No, you cannot pick and choose which debts to include; all unsecured debts must be included in the proposal[1][3][5].

5. What happens to my tax refunds in a consumer proposal?

You keep your tax refunds, but future tax refunds may be applied to any tax debt not included in your proposal[1][5].

If you have a question about debt see our debt questions or ask your own debt related question.

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