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Consumer Proposals

What is a Consumer Proposal?
A Consumer Proposal is an offer made by a debtor to his or her creditors to modify debt obligations.
How do I qualify?

The following must apply:

  • You are insolvent
  • You are unable to pay your regular monthly payments
  • Your total debt does not exceed $250,000.00 (excluding mortgage for a principal residence)
How does a Consumer Proposal work?
A Consumer Proposal is prepared with you and an Administrator of Consumer Proposal’s. It cannot exceed a length of five years and is usually in the form of monthly payments. It is filed with the Superintendent of Bankruptcy, and the Consumer Proposal is distributed to all the creditors. The creditors have 45 days to vote on the acceptance or the refusal of the Consumer Proposal. If the Consumer Proposal is accepted, all parties are bound by the terms of the Consumer Proposal. Once the debtor meets the terms of the Consumer Proposal, (i.e. makes all the payments and fulfill their duties under the Bankruptcy and Insolvency Act), the debtor receives a certificate of completion.
How does a Consumer Proposal affect my spouse?
Your spouse or partner will not be affected by your Consumer Proposal. If there is a significant amount of joint debt or assets it may be appropriate to file a joint Consumer Proposal.
How long does a Consumer Proposal last?
A Consumer Proposal cannot last longer than five years.
How does a Consumer Proposal affect my credit rating?
A consumer proposal will remain on the credit history for three years after the Consumer Proposal is completed.
Can I keep my credit cards in a Consumer Proposal?
Upon a Consumer Proposal being filed the debtor is required to deliver to the Administrator all the credit cards. Prepaid credit cards may be used during the term of the consumer proposal.
Will I lose my house or car?
One of the benefits of a Consumer Proposal is that the debtor retains control of all of its assets. It is the debtor’s responsibility to continue to make their monthly payments to their secured creditors (i.e. mortgage and car payments) as per the existing agreements.
What debts survive a Consumer Proposal?

Pursuant to Section 178 of the Bankruptcy and Insolvency Act some of the following debts survive, a consumer proposal:

  • Any court fines, penalties, restitution orders
  • Any award of damages by a court in a civil proceeding that involved intentional bodily harm, sexual assault or wrongful death
  • Alimony and child support payments
  • Any debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity
  • Liability for any dividend a creditor would have been entitled to receive when the creditor was not disclosed to the trustee
  • Student loans (depending on the circumstances)
How much does a Consumer Proposal cost?
There are no additional costs above the payments into the proposal. The fees for the administration of a Consumer Proposal are determined by a tariff under the Bankruptcy and Insolvency Act.

Division I Proposals

What is a Division I Proposal?
A Division I Proposal is an offer made by a debtor to their creditors to modify their debt obligations and is available to individuals and businesses.
What is the difference between a Consumer Proposal and a Division I Proposal?
A Division I Proposal may be filed by individuals who owe more than $250,000.00 and by corporations.

Personal Bankruptcy

How do I qualify?
If you are unable to repay your debts as they become due and owe at least $1,000.00 you may be eligible to file bankruptcy.
What happens once I file for bankruptcy?
If bankruptcy is the appropriate option for your circumstances we at Crowe Soberman Inc. will work with you to prepare and complete the necessary documents. These documents are filed with the Office of the Superintendent of Bankruptcy, and forwarded to your creditors.
What are exempt assets?

Each province has specific legislation that outlines which assets are exempt from seizure in a bankruptcy. For the Province of Ontario they are:

  • Personal belongings and clothing of you and your family not exceeding $5,650 in value.
  • Household furniture and effects not exceeding $11,300 in value.
  • Tools and instruments of trade used by you in your profession or business not exceeding $11,300 in value.
  • A motor vehicle not exceeding $5,650 in value.
  • RRSP’s are generally exempt, except for contributions made in the last 12 months.
Do I lose my credit card?

Once an individual files for bankruptcy the debtor is required to deliver to the Trustee all their credit cards.

Will I lose my house?

Not in all cases. Depending on the amounts owed to the mortgagee and the equity available for your creditors. You do not automatically lose your house once you file bankruptcy.

What are surplus income payments?

The Office of the Superintendent of Bankruptcy provides annual standards as to what a family or individual will earn before surplus is paid to the Trustee.

How long will I be a bankrupt?
  • As a first time bankrupt, who complied with the duties under the BIA and has no surplus income, you will be entitled to automatic discharge 9 months after the date of the assignment unless the Trustee, a creditor or the Superintendent of Bankruptcy objects to an automatic discharge.
  • As a first time bankrupt that has surplus income, you will still be entitled to an automatic discharge but the length of time in bankruptcy is extended to 21 months after the date of the assignment.
  • As a second time bankrupt an automatic discharge may also be available after 24 months after the date of the assignment if you have no surplus income or 36 months if you have surplus income.
  • As a third time bankrupt, you will be required to attend the bankruptcy court, and the master will decide how long you are bankrupt.
  • There is an exception to the automatic discharge for debtors who have a large income tax debt (over $200,000 and more than 75% of the total debt). In this scenario, the bankrupt will not be entitled to an automatic discharge and the hearing in the bankruptcy court will be necessary.
Who will be notified about my bankruptcy?

As a part of the bankruptcy process, the Trustee notifies all your creditors of the bankruptcy. Canada Revenue Agency (CRA) is also advised of the bankruptcy. If there is a wage garnishment, the Trustee will notify your employer so that the garnishment can be stopped.

Will my student loan be covered in my bankruptcy?

If you have ceased being a full or part-time student for more than seven years then you can include your student loan debts alongside your other unsecured debts in a bankruptcy filing.

Do I have to meet with my creditors?

 The meeting of creditors only takes place if it is requested by the creditors or the Superintendent of Bankruptcy.

We are here to help.

Linda Stern Crowe Soberman Toronto
Linda Stern
Senior Manager, Licensed Insolvency Trustee, Corporate Recovery & Turnaround, Personal Debt Solutions
Frances Doria
Frances Doria
Manager, Corporate Recovery & Turnaround
Fei Xue Crowe Soberman Toronto
Fei Xue
Manager, Estate Administrator, Corporate Recovery & Turnaround