Creditor Arrangements
If you have accumulated too much debt or you have lost your employment and income and cannot manage the payments one solution that may be available to you is a consumer proposal.
By filing a consumer proposal with creditors, which is a process that is administered by a trustee in bankruptcy under the Bankruptcy and Insolvency Act, you will be granted a period of time to pay debts.
In a consumer proposal, you make payments to the trustee and the trustee distributes the funds to the creditors. The arrangements may include lump sum payments and monthly payments for a period up to 5 years. After the required payments have been made, the trustee will issue a certificate to you that states that you have satisfied the conditions of the proposal.
There are a number of advantages to filing a consumer proposal as follow:
- Creditors will be required to cease collection calls, legal actions and income garnishments
- You can arrange monthly payments to suit your ability to pay
- Interest ceases to accrue on your debts
- You are permitted to keep assets that may be otherwise available to creditors in a bankruptcy
- A consumer proposal remains on your credit record for 3 years after you have completed the repayment as compared to 6 years for a bankruptcy
- Creditors usually receive more toward repayment of debt in a consumer proposal than they would in a bankruptcy proceeding, so they tend to favour proposals