Struggling to make your monthly payments? In need of debt relief that will substantially reduce your monthly payments? Filing a consumer proposal in Toronto might be exactly what you need. In this article, we share some of the top considerations when it comes to consumer proposal Toronto to help you decide if it is the right option for you and your financial circumstances.
What is a consumer proposal?
Firstly, you might be wondering what a consumer proposal actually is. It is a legal form of debt settlement, in line with the Bankruptcy and Insolvency Act. With the support from an experienced Licensed Insolvency Trustee (the only professionals in Canada legally able to file all forms of debt relief), you will work to suggest an affordable monthly repayment figure. Your Licensed Insolvency Trustee will then work to negotiate this figure with your creditors. Consumer proposals can actually reduce your unsecured debts by up to 80%. If accepted, the remainder of your debt is given. If, for instance, you owe $10,000 in payday loans, credit card debt, and tax debt, you could work with a Licensed Insolvency Trustee to settle at repaying just $2,000 in a monthly payments of just $100. Each consumer proposal is different, but it is possible to have a substantial reduction in your debt. At Spergel, we have a 99% acceptance rate on any consumer proposals we file in Toronto.
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Our consumer proposal success stories
Our team of experienced Licensed Insolvency Trustees understand the challenges of Canadians living in Toronto. A rising cost of living, increasing interest rates, and a high cost of rent and mortgages in the city can make it a challenging place to live. We have been helping Canadians gain debt relief for over thirty years, and understand the implications of choosing the right form of debt relief. As well as helping individuals file consumer proposals in Toronto, we assist with:
- Professionals who cannot declare bankruptcy because of the impacts it could have on their career
- Individuals who are self-employed, or who work part-time. We help with securing consumer proposal payments that account for variable incomes
- Avoiding surplus income, a possibility likely for professionals in Toronto with high incomes. Filing a consumer proposal is a great way to avoid surplus income
How common are consumer proposals in Toronto?
The number of Canadians filing insolvency – either bankruptcy or a consumer proposal – increased by 10.2% in 2022 compared to 2021. The number of bankruptcies increased by 6% year over year, and the number of consumer proposals filed increased by 7.7%. Many of these were filed in the Greater Toronto Area, including Brampton, Mississauga, Scarborough, and Vaughan. Consumer proposals in Toronto are becoming more and more popular over the last few years, and for good reason. This is likely due to higher incomes and increased home equity in Toronto. Consumer proposals avoid surplus income payments, and allow you to keep your home.
What are the advantages and disadvantages of filing a consumer proposal?
Filing a consumer proposal in Toronto is a popular alternative to bankruptcy. Although not the right form of debt relief for everyone, understanding the pros and cons of filing a consumer proposal might help you to understand if it is right for you.
There are a number of key benefits of filing a consumer proposal:
- You only repay a small part of your overall unsecured debt – often, consumer proposals reduce debt by up to 80%
- You can keep your assets
- Settlements are legal, and once approved, your creditors are obligated to comply
- Monthly payments are agreed by you, and so are affordable
- They are interest free
- Consumer proposals put a stop to creditor actions including collection calls and wage garnishments, via a stay of proceedings
If you are considering filing a consumer proposal in Toronto, it is important that you also understand the disadvantages of consumer proposals:
- Consumer proposals cannot reduce secured debts, for instance, mortgages and car loans
- You need to meet the eligibility criteria in order to file a consumer proposal
- Consumer proposals have a negative impact on your credit report, although at Spergel, we can help you to rebuild your credit score
- If you miss 3 months of payments, your consumer proposal will be annulled and you will need to handle your debts once again
Ultimately, filing a consumer proposal in Toronto is a great alternative to bankruptcy, and a popular choice with Canadians. Learn more about filing a consumer proposal when you book a free consultation with an experienced Licensed Insolvency Trustee at Spergel.
Who can file a consumer proposal in Toronto?
There are a few eligibility criteria you will need to meet if you are considering filing a consumer proposal in Toronto:
- Your total debt should be more than $1,000, but less than $250,000 (excluding your mortgage);
- You must be unable to repay your debt
- Your debt is unsecured debt – including perhaps credit card debt, payday loans, tax debt, and student loan debts (provided you have been out of school for at least 7 years)
If you and your partner have shared debts, you may wish to file a joint consumer proposal. In this case, your debts must be $500,000 or less.
How much does a consumer proposal in Toronto cost?
No two consumer proposals are often the same. The cost associated with a consumer proposal depends on the negotiation you and your Licensed Insolvency Trustee achieve with your creditors. There are no upfront fees required to file a consumer proposal. Once your creditors have agreed to your proposal, that is the fixed monthly payment you will make each month for a maximum period of five years. You do not need to worry about paying your Licensed Insolvency Trustee, either – they are paid from the settlement offer before the funds go to your creditors. Your Licensed Insolvency Trustee will start by calculating what you would pay if you filed bankruptcy. This is the minimum amount that your creditors will accept. They will then look at the value of any assets you would need to surrender during bankruptcy, as well as any surplus income payments you might need to make. Given that Toronto is an expensive city where incomes are higher than most parts of Canada, the surplus income threshold is often exceeded. For this reason, many individuals instead choose a consumer proposal in Toronto.
Why would creditors agree to a consumer proposal in Toronto?
Contrary to popular belief, consumer proposals are not automatically accepted. Your creditors need to agree to your proposal in order for it to become legally binding. While many wonder why creditors would agree to accept less than the debt they are owed, they will likely receive more money than they would in a bankruptcy. While bankruptcy allows you to repay less, it has more severe consequences. You may not be able to keep assets like your house or car when you file bankruptcy, and it can impact some job roles. You might need to pay surplus income too. Filing a consumer proposal in Toronto still provides the opportunity of a fresh financial future by reducing your debts by up to 80%.
How to file a consumer proposal in Toronto
It is so easy to file a consumer proposal in Toronto. Here are the simple steps you need to take:
- Book a free consultation with a Licensed Insolvency Trustee at Spergel.
- Our experienced trustees will review your finances to check your eligibility, and to walk you through your debt relief options
- We will advise you on an appropriate amount to offer your creditors, based on your debts, budget, and assets
- Your trustee will sort the administration, and a stay of proceedings will stop any creditor action
- Once your consumer proposal is filed, you stop making payments
- Your creditors have 45 days to accept or reject your proposal – if 25% ask for a meeting, a vote is held among creditors
- Once accepted, there is a 15 day waiting period to gain court approval
- Once accepted by the court, you make your consumer proposal payments in line with the agreed terms
- You need to attend two credit counselling sessions in line with your terms
- Once the terms are fulfilled, you receive a Certificate of Completion, and your debts are cleared
At Spergel, we have a 99% acceptance rate on any consumer proposals we file.
Reach out to Spergel for consumer proposal help in Toronto
In order to file a consumer proposal, you need a Licensed Insolvency Trustee. They are the only professionals in Canada legally licensed and permitted to file a consumer proposal. At Spergel, our experienced Licensed Insolvency Trustees have been helping Canadians to file consumer proposals in Toronto for over thirty years. We treat every individual we meet with compassion and understanding. Unlike other bankruptcy firms, you will be assigned your own Licensed Insolvency Trustee to walk you through the end to end process of filing debt relief, instead of being passed from person to person. Book a free consultation today, or visit one of our Licensed Insolvency Trustees in the Greater Toronto Area.