What is a consumer proposal Ontario?

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A consumer proposal in Ontario offers a friendly way to manage debt without bankruptcy. You can repay a portion of your debt in manageable monthly payments over up to five years, with no interest, safeguarding assets like your home and car. A Licensed Insolvency Trustee (LIT) facilitates this process, so choose wisely. It will affect your credit score but is worth it for the impact it has on your mental and physical health. Reach out if you have questions! Not all trustees can be trusted.

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Consumer Proposal Ontario Question

What is a consumer proposal Ontario? I’d like a simple explanation of what a consumer proposal is, specifically in Ontario. It’s confusing to understand the details.

From: Anonymous Question
Location: Windsor, Ontario (ON)
Category: consumer proposal

Consumer Proposal Ontario Answer

A consumer proposal in Ontario is like a friendly handshake between you and your creditors, allowing you to settle your debts without going the bankruptcy route. Basically, you get a chance to pay back part of what you owe in smaller, bite-sized, monthly amounts over up to five years—and the best part? No interest! This process is guided by a Licensed Insolvency Trustee (LIT), the expert who checks out your financial situation, drafts the proposal, and works things out with your creditors. If most of them are on board, the deal is sealed, and you get to keep important stuff like your house and car safe from creditors trying to grab them.

To be eligible, you should owe less than $250,000 in unsecured debts. There is an R7 credit rating involved, which will put a small ding on your credit score for a while after you’re done. Compared to jumping into bankruptcy, consumer proposals offer more perks; you can hang on to your assets and enjoy flexible payments. Just keep in mind, it makes a public record and there’s a fee for the trustee. And a word to the wise—do your homework when choosing a trustee. For any burning questions, don’t hesitate to call, text, or chat with us live!

From: Insider Adam

Office of the Superintendent of Bankruptcy (OSB) Answer

A consumer proposal in Ontario is a formal, legally binding agreement between a debtor and their creditors to settle debts for less than the full amount owed. It allows individuals to make affordable payments over a fixed period, usually up to five years, which helps avoid bankruptcy. This process is governed by the Bankruptcy and Insolvency Act, specifically Section 66. It requires the proposal to be filed with a licensed insolvency trustee, who will help negotiate terms with creditors. If accepted by creditors, the consumer proposal protects the debtor from legal actions and garnishments during the repayment term.

From: OSB Helper

Related Questions to What Is A Consumer Proposal In Ontario

Here are the top 5 most frequently asked questions related to “What is a consumer proposal in Ontario?” based on common queries and current trends:

1. What is a consumer proposal?

A consumer proposal is a formal agreement between a consumer and their creditors to settle debts without filing for bankruptcy, where the consumer repays a portion of the debt over a maximum of five years[1][4][5].

2. How does the consumer proposal process work in Ontario?

The process involves selecting a Licensed Insolvency Trustee, assessing your debts, preparing and filing the proposal, obtaining creditor approval, and making monthly payments over the agreed term[1][2][5].

3. What are the benefits of a consumer proposal compared to bankruptcy?

The benefits include protecting assets like your home or car, consolidating debts into one monthly payment, and potentially reducing the amount of debt to be repaid, all without the stigma of bankruptcy[1][3][4].

4. How much does it cost to file a consumer proposal?

It costs about $750 to file a proposal, and if it’s accepted, another $750, with the trustee also retaining 20% of future payments as a fee for administering the proposal[4].

5. How long does it take to complete a consumer proposal?

A consumer proposal typically takes up to five years to complete, during which time you make monthly payments, and you must attend at least two financial counselling classes[1][4][5].

If you have a question about debt see our debt questions or ask your own debt related question.

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