What Do We Need From You?
We understand that this can be a challenging time for you, but to begin the proposal process, we will need some basic information about your situation. Here's what we'll need to get started:
We know how much stress you are under, so we manage all the negotiations with your creditors, giving you time to breathe. Working with a Crowe MacKay & Company LIT means getting a partner committed to helping you become debt-free.
What Debts Are Covered in a Consumer Proposal?
A consumer proposal usually covers all your unsecured debts, which may include the following:
You must first determine your eligibility to file a consumer proposal in British Columbia. To qualify for a consumer proposal, you must meet the following criteria:
The initial step to determine if a consumer proposal suits your needs is to schedule a free, confidential consultation with one of our Licensed Insolvency Trustees. They will assess your financial situation and explore all available debt relief options with you. The consumer proposal process typically includes the following steps:
The key difference between personal bankruptcy and a consumer proposal is its impact on your assets. Although bankruptcy may be a quicker and cheaper way out of debt, you must surrender your assets to start fresh.
On the other hand, when you file a consumer proposal with your creditors, you can retain all your assets and get the chance to settle the debt fairly and responsibly.
Opting for a consumer proposal comes with many advantages. These include legal protection from creditors, no collection calls, and the option to settle for an affordable monthly payment that never increases.
Once drafted, the proposal is submitted to your creditors and the Office of the Superintendent of Bankruptcy (OSB) for consideration. While every situation is unique, it takes at least 60 days for a consumer proposal to be fully approved.
Creditors have 45 days to file a claim and vote for or against your proposal.
Creditors holding at least 25% of your debt can also request a creditors' meeting to discuss your proposal within 45 days of filing the proposal.
Once your creditors have accepted your proposal, the OSB, or any interested party, has 15 days to ask your LIT (us) to apply to the Court to approve the proposal. The proposal is deemed approved by the Court at the expiry of 15 days if no request is made.
Filing for a consumer proposal does not affect the terms of your mortgage. If you need to renew your mortgage while in the middle of a consumer proposal with your present lender, it should not be a problem if you've made your mortgage payments on time.
If you decide to change your mortgage lender despite being bound by a consumer proposal contract, the approval of your application is not guaranteed. This doesn't mean you will be denied a mortgage, but the lender may have specific requirements, such as a higher interest rate.
Filing for a consumer proposal will give you an R7 credit rating, meaning you have agreed on a settlement with your creditors. Your credit report will also note that you filed a consumer proposal for 36 months after the date of the final proposal payment.
Crowe MacKay & Company's Licensed Insolvency Trustees share how to understand your credit rating, the impacts of a consumer proposal on your credit, and how to rebuild it.
While consumer proposals offer many benefits, keep in mind these points:
Overall, consumer proposals provide a manageable, asset-protecting, and empowering way to become debt-free with peace of mind.
When you file a consumer proposal, the Trustee will assist with preparing a provisional tax return for the pre-proposal portion of the tax year. The Canada Revenue Agency (CRA) may hold or apply your pre-proposal and any prior year tax refunds toward any outstanding tax debts you owe. This means that instead of receiving your full refund, the CRA will use it to reduce your tax debt balance. However, if your rebate exceeds the amount of your tax debt, you will receive the remaining balance after the CRA applies what is owed.
It's important to note that a consumer proposal includes tax debts owed to the CRA, which are considered unsecured debts. Your Licensed Insolvency Trustee will work with you and the CRA to address these debts as part of your proposal. While the CRA can apply your refund to outstanding tax debts, filing a consumer proposal stops any further collection actions, such as wage garnishments or legal proceedings, giving you relief and relieving your debt pressure.
Book a Free Consultation
Our licensed experts are here to answer all your questions about bankruptcy and consumer proposals. Whether you're an individual or a business, we’ll help you understand your options and guide you through every step of the process with care and confidence.
