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FAQ

Common Questions about Bankruptcy and Consumer Proposals

What is a Consumer Proposal?
Why file a Consumer Proposal?
Who can file a Consumer Proposal?
How long must I wait to see if my Proposal has been accepted?
What happens if my Consumer Proposal is not accepted?
What happens if I can no longer fulfill the terms of my Proposal?
What happens when my Consumer Proposal is completed?
What is Bankruptcy?
How much will a Bankruptcy cost?
How long will I be in Bankruptcy?
How do I begin the process of filing for bankruptcy?
Which assets am I allowed to keep if I go into Bankruptcy?
What is Surplus Income? What happens to my wages while I am bankrupt?
Will my creditors stop harassing me?
How will my Bankruptcy or Consumer Proposal affect my credit rating?
What happens if someone has co-signed one of my debts?
What debts cannot be included in my Bankruptcy or Consumer Proposal?

What is a Consumer Proposal?

A Consumer Proposal is a legally binding settlement agreement which usually involves some debt forgiveness and/or extended repayment. The Consumer debtor is granted further time to repay the debt and/or revise the amount payable, subject to the approval of his/her creditors and the Court.

Why file a Consumer Proposal?

Individuals who are unable to repay their debts, or unable to meet repayment deadlines, may choose to file a Consumer Proposal. A Consumer Proposal stops collection actions (including garnishments) and interest charges.

Who can file a Consumer Proposal?

Generally, you may file a Consumer Proposal if:

Your debts, excluding mortgages on your principal residence, do not exceed $75,000.00; and
You are an insolvent natural person (ie: you are a resident in Canada, you have debts of a $1,000.00 or more and you are not able to pay your debts as they become due);

How long must I wait to see if my Consumer Proposal was accepted?

The Consumer Proposal will be deemed to have been accepted by all of your unsecured creditors if 50% plus one of the creditors by dollar value vote in favour of the Consumer Proposal..

What happens if my Consumer Proposal is not accepted?

If 25% or more of your creditors vote against accepting your proposal, a meeting will be held where the Administrator will assist you in discussions with your creditors to negotiate an amended proposal acceptable to you and your creditors. If no agreement is reached, the proposal process ends and the creditors may then take whatever legal actions are available to collect the money owed to them.

What happens if I can no longer fulfill the terms of my Proposal?

If you miss three payments under your proposal, the Proposal will be annulled and the Proposal comes to an end. The rights of the creditors will be revived and interest will be charged from the date you filed your Proposal.

What happens when my Consumer Proposal is completed?

When you complete all the terms of the proposal, you will receive a Certificate of Full Performance and you will be relieved from all your previous debts.

What is a bankruptcy?

Bankruptcy is a legal process that stops collection action against a debtor in order to for a debtor to rehabilitate himself or herself and start fresh without the burden of debt.

How much will a bankruptcy cost?

The Trustee's fees may vary, however, in most circumstances the cost is approximately $1,575.00. This includes the filing fee paid to the government, two financial counsellng sessions required under the Bankruptcy and Insolvency Act (BIA) and GST. We realize that most people who go into bankruptcy may not have funds available to pay the fee up front, so we will arrange a monthly payment schedule you can afford.

How long will I be in Bankruptcy?

In most cases, if it is your first bankruptcy, you will be an undischarged bankrupt for a period of nine months. After the nine months you will be automatically discharged from bankruptcy, unless a creditor, the Trustee, or the Superintendent of Bankruptcy opposes your discharge. If it is opposed, the court may decide the terms regarding your discharge.

How do I begin the process of filing for bankruptcy?

You can begin the process by either calling our office and speaking with one of our staff about your current financial situation or you may download our application form, fill it in and send it to us by email, fax, mail. We will review your information and contact you to arrange a meeting.

Which assets am I allowed to keep if I go into bankruptcy?

You are allowed to keep Household Goods up to a value of $11,300.00, Personal Effects up to a value of $5,650.00, a Motor Vehicle up to a value of $5,650.00, and Tools of Trade up to a value of $11,300.00. This is assuming you have not given the asset as security for a loan. In addition, you may keep your interest in your life insurance policies if the beneficiary is spouse, parent or child. Assets exempt from seizure also include pension plans or locked in retirement savings plans (however, contributions made in the 12 months prior to the date of bankruptcy are excluded from exemption and can be recovered by a trustee in bankruptcy).

What is Surplus Income? What happens to my wages while I am bankrupt?

You don't have to turn over your wages to the Trustee while you are in bankruptcy. However, if you have a high level of income (according to standards set by the Office of the Superintendent of Bankruptcy), you may be required to make what is referred to as a surplus income payment for the benefit of your creditors. Each person's financial situation is different and circumstances relating to the surplus income will vary for each individual. Your Trustee will be able to advise if such a payment by you is required.

Will my creditors stop harassing me?

Yes. Our office will help deal with your creditors. All actions against the bankrupt must stop once the bankruptcy is filed; this includes garnishments and legal actions.

How will my Bankruptcy or Consumer Proposal affect my credit rating?

A bankruptcy will remain on your credit record for a period of 7 years from the date of bankruptcy and a Consumer Proposal will remain on your credit record for 3 years following the date of completion of the proposal. However, once you receive your discharge from bankruptcy or your certificate of full performance from your proposal, you may slowly begin to re-establish credit.

What happens if someone has co-signed one of my debts?

If anyone has co-signed or guaranteed any of your debts, your bankruptcy does not release them from their responsibility. However, a supplementary card holder may not be legally responsible for the primary card holder's debt.

What debts cannot be included in my Bankruptcy or Consumer Proposal?

There are some debts that are not discharged by a bankruptcy or a consumer proposal, including, a fine or penalty imposed by a court; an award of damage by a court for bodily harm, sexual assult; alimony; support or maintenance of a spouse or child; a debt arising from fraud, embezzlement, misappropriation, or defalcation while in a fiduciary capacity; any debt for obtaining property by false pretenses or fraudulent misrepresentation; student loans if the bankruptcy occurs either before the student leaves school or within 7 years of leaving school.