Consumer Proposals: A Bankruptcy Alternative in Toronto

No one wants to declare bankruptcy. Bankruptcy means a huge hit to your credit score, and you risk losing vital assets such as your house. Before you begin the process of filing for bankruptcy, consider whether or not you are eligible to submit a consumer proposal.


What is a consumer proposal?

A consumer proposal is an agreement with your creditors that you will repay part of your debt over a period of time. Your creditors agree to forgive the rest of what you owe, so you no longer have to worry about repaying the entire amount. The repayment period also cannot be more than five years long, so you will not be making payments for the rest of your life.


What happens when I file?
Once you file a consumer proposal, any wage garnishments against you will halt, and interest will stop accumulating on your debt. It will also be against the law for your creditors to contact you and demand payment.


How is a consumer proposal better than bankruptcy?
Bankruptcy results in a much bigger hit to your credit score than a consumer proposal does. You also don’t have to give up your assets as part of the consumer proposal agreement, which means you don’t have to worry about losing your house, car, etc.


How do I know if I’m eligible?
There are six major criteria for eligibility:


  1. Be a person: You must be an individual. Corporations are not eligible for consumer proposals.
  2. Be insolvent: You must be patently unable to pay your debts, plus interest, on your own.
  3. Have a certain amount of debt: You must have more than $1,000 and less than $250,000 worth of debt. The mortgage on your house is not included in this amount.
  4. Have a stable income: You must be able to make payments on the amount you agree to repay. This means you must have a job and receive steady paychecks, or have some other reliable source of income.
  5. Have no prior proposals still open: You cannot have any prior consumer proposals that are still in process.
  6. Be unable to get a debt consolidation loan: The amount of debt you carry must be too high to qualify for a debt consolidation loan.


How do I file?
An insolvency firm such as Harris & Partners Inc. can determine your eligibility and help you file your consumer proposal. Check out our website (http://www.harrisandpartnersinc.com/) and let us help you achieve a fresh start.