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Consumer Proposal

Discover how to offer your creditors a lower settlement based on your ability to repay.

What is a consumer proposal?

You are not filing for bankruptcy

Whenever financially possible, the proposal should always be the preferred alternative to regain your financial freedom.

Protecting your assets against seizure

The consumer proposal allows you to shelter yourself from your creditors’ legal proceedings. Lawyer fees, the risk of losing your assets and much stress are therefore avoided.

You keep all of your assets

This is an important advantage if you have assets (such as a home) that are worth more than the what you owe on said asset (for example – your mortgage or car loan).

Creditors stop calling

Once the proposal has been filed, the trustee becomes the only contact with your creditors. No more calls.

A good option for you if :

  • You are able to repay a part, but not all, of your debts;
  • You have filed for bankruptcy in the past and want to avoid the drawbacks of a second bankruptcy;
  • You have assets that are worth significantly more than the amounts due to your secured creditors;
  • You are a professional, licensed or not, and do not want your work to be affected by a bankruptcy;
  • You wish to avoid bankruptcy for personal reasons.

4 steps to free yourself without having to file for bankruptcy

  1. An initial meeting with your counsellor to discuss your options;
  2. Signing of documents and the start of the protection provided by law;
  3. On the 45th day, votes submitted by your creditors are counted;
  4. When accepted, once the final payment is made on your proposal, discharge of all your debts (some exceptions apply by law).

Your questions

The discharge from bankruptcy will erase all debts, except those listed in Section 178 of the Act which reads as follows:

  • Any award of damages by a court in respect of bodily harm intentionally inflicted, or sexual assault, or wrongful death resulting therefrom;
  • Any debt or liability for alimony;
  • Any debt or liability under an order for the maintenance and support of a spouse or child living apart from the bankrupt;
  • Any debt or liability arising out of fraud, embezzlement, misappropriation while acting in a fiduciary capacity;
  • Any debt or liability for obtaining property by false pretences or fraudulent misrepresentation;
  • Any liability for the dividend that a creditor would have been entitled to receive on any provable claim not disclosed to the trustee;
  • Any debt or obligation in respect of a student loan guaranteed by the government where the date of bankruptcy occurred before the date on which the bankrupt ceased to be a student or within 7 years after the date on which the bankrupt ceased to be student;
  • Any debt for interest owed on any of the above noted non-dischargeable debts.

Under the Act, you have the right to have or open a personal bank account even if:

  • You are unemployed;
  • You do not have money to deposit in it immediately;
  • You have declared bankruptcy.

However, the Bank is entitled to refuse to open an account if:

  • It believes that you will use the account in an illegal or fraudulent manner;
  • You have ever engaged in illegal or fraudulent activity at a bank over the past seven years;
  • You have provided it with misleading information;
  • You do not agree that it verify the information described above;
  • You are unable to present proper identification.

If you are dissatisfied with any decision or action taken by a financial institution, you can complain to the Ombudsman for the bank. His role is to analyze the situation objectively and make corrections when necessary. Here’s how to reach them:

CIBC Bank : 1-800-308-6859
Bank of Montreal : 1-800-371-2541
Laurentian Bank : 1-800-479-1244
National Bank : 1-888-300-9004
Royal Bank : 1-800-769-2542
Scotia Bank : 1-800-785-8772
TD Bank : 1-888-361-0319
Desjardins Group : 514-281-7434
Ombudsman of the Canadian Bankers Association : 1-888-451-4519
Financial Consumer Agency of Canada (FCAC) : 1-866-461-2232

In declaring bankruptcy or filing a consumer proposal, you place yourself under the “protection of the law”. All seizures or judicial proceedings are stopped except for three exceptions:

  • A secured creditor may continue his proceedings (ex. a mortgage creditor), but the proceedings are limited to the repossession the assets subject to a lien (ex. mortgage, conditional sales contract);
  • A garnishment of wages for alimony or child support payments;
  • A creditor who has obtained a judgement of the Court. This is an extremely rare exception and usually involves fraud.

If you declare bankruptcy, you are required to turn in all of your credit cards, whether or not amounts are owed. On the other hand, although you are not required to turn in your credit cards if you file a proposal, the issuer will likely cancel said card if there is an amount owed or if the issuer is otherwise informed of your proposal.

Your credit rating score will be an R-9 during the period of your proposal and an R-7 for a period of three (3) years after the end of your proposal. Whereas in the case of a bankruptcy, your credit rating score will be an R-9 for six (6) years following your discharge from the bankruptcy. Most people refer to the time period as seven (7) from the date you declare bankruptcy. 

Yes. One of the primary goals of the consumer proposal is to allow the debtor to keep all its assets. However, the more assets you have, the more your proposal will have to offer in order for it to be interesting for the creditors.

If your former spouse declares bankruptcy, it does not release you in any way from continuing to pay alimony, child support, or any arrears. As well, if you owe your former spouse alimony, or child support payments, you could have your wages garnished notwithstanding the bankruptcy. Alimony, child support and arrears are very well protected and these debts will live on after the bankruptcy.

It goes without saying that if, just prior to your declaring bankruptcy, you used your credit cards and made purchases knowing full well that the charges would not be paid back, such actions are not acceptable under the Act. In such cases, the Act provides that the creditors may oppose your discharge, or they may ask the court to have you pay additional amounts to the trustee or to have the debt declared non-dischargeable. This last recourse would mean that the debt would have to be paid back after your discharge from your bankruptcy, with interest. This type of behaviour is not recommended.

The only requirement is that a business, whose sole proprietor is in bankruptcy, must give notice to those with whom he deals that he is in personal bankruptcy. On the other hand, you no longer can be an administrator of an incorporated company so long as you are not discharged from your bankruptcy.

90% of proposals filed by Jean Fortin & Associés are accepted.