Your Path to Debt Freedom
Spergel has Answers
Spergel Knows Consumer Proposals.
It is a standard amount set by the government and is included in your repayment schedule.
You may qualify for a consumer proposal if you are insolvent but have a stable income. Your total debts must be valued at less than $250,000 dollars, excluding mortgage debt on your principal residence.
In cases where you have joint debts with another person, such as a spouse, it is possible to file a joint proposal with that individual. If filing with another person, you can have a combined total of up to $500,000 dollar in debt.
Consumer proposals are only available to individuals and do not apply to businesses.
If you have any further questions about who qualifies for a consumer proposal, please contact a Spergel trustee near you.
A consumer proposal includes all unsecured debts. Unsecured debts are those that do not have an asset, or “security,” against them.
Consumer proposals are especially useful for consolidating unsecured debts, such as:
- credit card debt
- lines of credit
- payday loans
- income tax arrears
- student loans older than 7 years
- other unsecured debt
What about secured debts?
The most common forms of secured debt are mortgages or car loans. If you default on your mortgage, for example, the bank can claim the house to recover the loan. The house is a ‘security’ against the mortgage loan.
A consumer proposal does not cover these secured debts.
If you have any further questions about what debts are included in a consumer proposal, please contact a Spergel trustee near you.
- Your trustee can submit a revised proposal; or
- Your trustee can help you file for bankruptcy; or
- You can continue to deal with your creditors as if nothing has been filed.
A joint consumer proposal occurs when spouses submit the consumer proposal repayment plan together.
In order to qualify for a joint consumer proposal “all or substantially all of the debts for individuals involved must be similar.” In most cases, the trustee overseeing the case will advise whether it makes financial sense to file as individuals or together.
When two individuals file a joint consumer proposal, the maximum amount of debt allowed is increased to $500,000 ($250,000 X 2). Another added benefit is that the costs of administration are reduced. Other benefits of a consumer proposal are that it is removed from your credit record 3 years after successful completion, and there is no automatic bankruptcy if it is unsuccessful.
The disadvantages to this approach to debt relief are:
- The consumer proposal will appear on the credit report of both individuals
- Both individuals are responsible for making proposal payments. If one person fails to make their payments, the other individual will have to make those payments or annul the proposal once 3 monthly payments have been missed
Engage in an open and honest conversation with your trustee. They will be able to advise you on an approach that makes most sense for your situation.
It is important to note that creditors are stayed from taking further action against you after the filing of either a consumer proposal or a personal bankruptcy
If you have money left over after paying your monthly living expenses, then you could qualify to file a consumer proposal. To assess your situation, visit our Monthly Budget Form.
The Trustee collects your monthly payments, and distributes them to your creditors, thus ending communication between yourself and your creditors.
Garnishment is a legal proceeding that some creditors will undertake in order to collect outstanding debts. A creditor files a lawsuit and if the court rules in their favour, a judgment is ordered against you and the creditor makes an application to garnish your wages.
Money is generally taken directly from your pay cheque and provided to the creditor garnishing your wages. Garnishments are taken against wages as directed under the Wages Act of Ontario. The amounts that creditors and lenders can garnish from your pay varies across Canada, but in Ontario it generally ranges from 20%-50%.
There is one exception to this rule and that is the Canada Revenue Agency. The Canada Revenue Agency does not need to go to court to receive a judgment prior to garnishing your wages. The CRA can begin to garnish your wages after sending notice to the debtor.
Some types of income cannot be garnished, including: employment insurance, social assistance, and pensions. An exception to this rule again is the Canada Revenue Agency. They may take from your government pension through a right to set off.
In order to stop wage garnishing, an individual can:
- Repay the outstanding debts
- Appeal to the courts for help if the garnishment order causes undue financial and emotional hardship
- File a consumer proposal
- Declare bankruptcy
Wage garnishment can be a lengthy process for creditors as they have to take the matter to court. It is often a last resort.
If you find your financial situation reaching an unbearable state, reach out to a trustee and explore your options
A consolidation loan can combine all your debt into one monthly payment at a lower interest rate, however, it has to be negotiated with each creditor you owe money. A consumer proposal is a monthly payment negotiated with all creditors at once by your SPERGEL proposal administrator for an amount less than what is owed with zero interest. Once the proposal is agreed to by your creditors, it is legally binding. Pay as agreed and you will have no further obligations to your creditors.
A consumer proposal is designed to help you obtain control of your financial situation. The goal of a proposal is to help you repay your debts, in a manageable way, while also working towards your future life goals.
So, as long as you’re able to make your payments stipulated under your proposal terms, you are permitted to save money.
In fact, a consumer proposal is organized in a way that requires you to live within your means. It’s a great opportunity to end any overspending habits and cultivate financially responsible habits instead. Take your financial counseling sessions seriously and take notes of practical tips to ensure your future financial success.
Create a budget around your proposal payments and stick to it! You must make your monthly proposal payments. Any extra income you have can be carefully channeled towards housing, food, transportation expenses, and, of course, savings!
Use the time afforded to you under your consumer proposal to practice financial responsibility. Without the burden of insurmountable debts, you can save for your future in a careful and meaningful way. Once the terms of your consumer proposal are met, you can be confident in your ability to live in a financially responsible way.
Spergel Knows Personal Bankruptcy.
A consumer proposal is not the solution for every individual. For some individuals, bankruptcy is the best option.
In order to qualify to file for personal bankruptcy you must:
- Owe debts of at least $1000
- Have debts that are more than the amount you earn/ greater than the value of your assets
- Not be able to pay your bills as they become due
- Not already be bankrupt at the time of filing.
After declaring bankruptcy, your creditors will halt any legal action against you, including collection efforts.
Bankruptcy offers individuals a fresh start in their financial life. Although you may qualify for personal bankruptcy and it seems like the fastest way to resolve your debt issues, you should discuss your situation with a trustee before proceeding.
Filing for bankruptcy doesn’t mean you lose everything. Some of your assets are exempt from bankruptcy, so you will get to keep them.
Bankruptcy is supposed to provide you with a fresh financial start. That means you can keep some of the assets that will help you begin rebuilding your finances.
When you file for bankruptcy in Ontario, you can keep:
- Standard Living Allowance
- Tools of the trade with a resale value up to $11,300 (equipment used to assist in earning a living)
- Household goods with a resale value up to $11,300
- Personal belongings up to $5,650
- Motor vehicles up to $5,650
- Farm equipment up to $28,300
- All private pensions and RRSP amounts (excluding the amounts contributed in the last 12 months)
Filing for bankruptcy in Ontario means a new beginning. Our bankruptcy trustees will work with you to help get your finances in order and set you on the road to financial recovery.
If you have any further questions about what you can keep when you file for bankruptcy, please contact a Spergel trustee near you.
It is a standard amount set by the government based on your financial position and paid through the bankruptcy process.
We offer a free initial consultation to anyone with debt problems. Our fees are set by government tariff and no additional costs are incurred.
This is available through several non-profit agencies. Depending on your debt structure, this assistance could help you rearrange your budget or even develop a payment plan without a bankruptcy or consumer proposal filing.
A Trustee in Bankruptcy works with people in financial trouble to help them get out of debt. Also known as a bankruptcy trustee, they are the only person who can administer consumer proposals and bankruptcies.
Spergel trustees in bankruptcy can help you with debt counseling and negotiation of your debt settlements. In the case of a consumer proposal, the trustee will help you draft a proposal for your creditors, which can help you avoid bankruptcy.
Trustees are federally regulated and licensed by the Superintendent of Bankruptcy. They are officers of the court who work with both you and your creditors to find a mutually agreed upon solution to your debt problems.
A trustee in bankruptcy will also:
- Review your financial status and provide credit counseling.
- Evaluate your creditors’ claims and ensure these are valid.
- Prepare all official documentation, including your application for discharge from bankruptcy.
- Work with you from the beginning to the end of the process, administering your bankruptcy estate file, and handling your legal responsibilities.
If you have any further questions about what a Trustee in Bankruptcy is, please contact a Spergel trustee near you.
Your bankruptcy ends all payments from yourself to unsecured creditors. Your SPERGEL administrator will help you arrange to continue to pay your secured creditors.
You can keep your current bank account, but you may want to open a new bank account to begin your fresh start.
- Your spouse’s income and most assets and debt – they are separate from your own
- Joint Assets – 50% of assets that are in both your names will become part of your bankrupt estate
- Joint Debts – your spouse is now 100% liable for the entire debt upon filing your bankruptcy