Debt is something we may all face. However, without budgeting for income vs expenses, your debts can rise to a point where you might feel like you have lost all control over your finances. As a result, you may find yourself unable to keep up with your monthly payments, slip into minimum payments (red flag!) and continue adding on to your debt load.  This affects your credit score.  And once you start to fail minimum payments, your credit score is affected again.  

Usually debtors have already tried all sources and means to pay their way out of debt.  This may include additional jobs, selling off equipment or goods, returning purchases, garage or internet sales, borrowing from friends and relatives, moving and getting money management help.

The team at A.C. Waring & Associates is here to help you find the financial stability you need.  You may need just someone to talk over your financial matters and take that advice.  Or you may need to initiate official formal proceedings in the form of either a Division II Consumer Proposal or a Division 1 Bankruptcy proceeding depending on your financial situation.

What is a Consumer Proposal?

A Division II Consumer Proposal is an alternative to bankruptcy and can only be administered by a Licensed Insolvency Trustee.  To qualify for a Consumer Proposal, you will need to have accumulated consumer debt of less than $250,000, with the exception of the mortgage on your principal residence. 

You will also need a predictable source of income even though it may presently be insufficient to service your consumer debts as they stand.

After consultation with a Trustee, it will be determined whether or not a Consumer Proposal is appropriate for your situation. If it is, then a formal proposal will be drafted and executed by you and submitted to your creditors by the Trustee. The proposal must detail what percentage of the amount owed will be paid to creditors and the length of time over which the payments will be made (up to 5 years). 

If the majority of unsecured creditors, based on dollar value, agree to the proposal, the Trustee will proceed to oversee the matter.  If they do not agree, you will remain in the situation you are presently in.  Subsequently other options can be discussed.

When Should You Consider a Consumer Proposal?

The best time to talk to a Trustee about a Consumer Proposal is when you’re finding yourself burdened by debt that you cannot service or if your creditors are preparing to take legal action in order to garnish your wages or even seize your assets.

woman working on papers

What to Expect & Next Steps

What to Expect During the Consumer Proposal Submission and Approval Process

The first thing you will need to do is to recognize you are not able to keep up with your current financial obligations. Next, you will need to speak to a Licensed Insolvency Trustee to go over which options are best for you given your financial and personal circumstances. Trustee consultations are free and referrals are not required.

Your Trustee will advise you of whether or not your financial situation permits a Consumer Proposal.  When developing a Consumer Proposal to be presented to your creditors for approval or rejection, your Trustee will help draft a reasonable and appropriate financial plan including the total amount to be paid and the time period it will span.   

Once prepared, your Trustee will then send the proposal to your creditors who will have up to 45 days to respond by voting letter.

If it is accepted you may move on into implementing the proposal requirements and your creditors will no longer be pursuing you through formal or informal collection action. 

During the agreed-upon proposal timeframe, you will pay a percentage of the total amount owed.  However, if you miss 3 payments, your proposal will be annulled and your creditors will have the full right to pursue for what they are owed.

Talk to a Licensed Insolvency Trustee such as A. C. Waring & Associates in order to acquire financial counseling, orderly debt resolution, budgeting, debt solutions and credit score management.