Trustee Rob Kilner explores 5 Consumer Proposal facts you may not know.
If you’ve heard that there is a debt repayment option that avoids bankruptcy – you’ve heard correctly. You may know that there is an option that stops interest, reduces your debt and protects you from a wage garnishment and/or the loss of your assets. You may know this option is called a consumer proposal and that a Licensed Insolvency Trustee (LIT) can help you get started.
Spergel LIT Rob Kilner wants to familiarize your with the consumer proposal option so that you can make an informed decision about your debt repayment options.
“When people visit my office I spend a lot of time answering questions about the process. Many people are unfamiliar with the ins and outs of a proposal. When I meet with someone I try to make sure they leave with the answers they are looking for.” Says Rob.
Below is a list of proposal facts that most people find surprising:
1 A Consumer Proposal Reduces What You Pay Back
First, a consumer proposal reduces what you repay (in most cases).
“We review your debts, assets, income and expenses to determine what you can offer to your creditors in a consumer proposal. Essentially, based on the facts of your current circumstances, we develop an offer that you can make to your creditors and they get to vote on your offer.” Explains Rob.
“A typical proposal may pay back as little as 25% of the total debt owed.” Adds Rob.
2 A Consumer Proposal Eliminates Interest on Your Debt(s)
“In a consumer proposal interest stops as soon as your paperwork is filed with the government. You’ll make one payment to your LIT and we’ll send money to your creditors on an annual basis. Your debts are frozen in time at their current balances and stop going up.” Says Rob.
3 The Consumer Proposal Process Can Last as Long as 5 Years
“The average length of a consumer proposal is 60 months or 5 years. You can offer a proposal that takes less time, but your creditors may choose to ask you to extend your payments up to a maximum of 5 years.” Explains Rob.
“If you have funding to offer what we call a lump sum proposal (where all funds are paid within a short term, typically a few months’ time) we can help you make an offer that will help you become debt free as fast as possible.” Rob adds.
4 In Canada, the Consumer Proposal option wasn’t always available
Prior to the 1990s the Bankruptcy and Insolvency Act (BIA) didn’t include the consumer proposal option. Proposals are among Canada’s most popular debt solutions today. Proposals are one of the best alternatives to filing bankruptcy. Because of economic changes over time, the BIA was eventually amended to increase the amount of debt that can be included in a consumer proposal.
5 A Consumer Proposal Doesn’t Impact Your Status as a Corporate Director or Will Executor
“For some people a bankruptcy isn’t a good option. If you are the director of a corporation, filing bankruptcy means that you must resign your post. For people who want to continue as a corporate director, a consumer proposal can avoid this problem.” Explains Rob.
“Similarly, if you are executor of a will or holding trust funds for someone, bankruptcy has strict rules. By filing a consumer proposal you can avoid having to resign as an executor. For some people this is very important.” Says Rob.
Rob Kilner serves the Barrie, Newmarket and London regions and would be happy to explore your options with you. We offer online booking, or you can call 310-4321 to speak with a member of our team. Discover how great debt freedom feels and learn more about consumer proposals. You owe it to yourself.