Dealing with overwhelming debt can take a toll on your physical and mental health. A consumer proposal can be a lifeline for individuals seeking relief from unmanageable financial burdens.
What is a Consumer Proposal?
A consumer proposal is a formal legal process governed by the Bankruptcy and Insolvency Act (BIA) that allows individuals to negotiate a repayment plan with their creditors. This arrangement is a way to consolidate debts into manageable payments without declaring bankruptcy.
Benefits of Filing a Consumer Proposal
- Debt Consolidation: With a consumer proposal, you can combine all your unsecured debts into a single monthly payment, making it easier to manage your financial obligations.
- Protection from Creditors: Once your proposal is filed, your creditors are legally prohibited from pursuing further legal actions or contacting you for debt collection.
- No Interest Charges: Unlike other debt relief options, such as credit counseling, a consumer proposal freezes interest charges on your debts, providing significant financial relief.
- No Wage Garnishment: Filing a consumer proposal prevents creditors from garnishing your wages, allowing you to maintain your regular income.
- Keep Your Assets: Unlike bankruptcy, where you may be required to surrender certain assets, a consumer proposal allows you to retain possession of your property and assets.
- Peace of Mind: A consumer proposal offers emotional relief by reducing financial stress and providing a structured path to becoming debt-free.
Do I Qualify to File a Consumer Proposal?
To file a consumer proposal in Victoria BC, you must meet the following criteria:
- Canadian Resident: You must be a Canadian resident or have property in Canada.
- Unsecured Debts: Consumer proposals apply only to unsecured debts, such as credit card debts, personal loans, tax debt, and payday loans.
- Total Debt Limit: Your total debt cannot exceed $250,000, excluding your mortgage.
- Ability to Make Payments: You must have a stable income or assets to make regular monthly payments under the proposed plan.
Steps to File a Consumer Proposal
- Consultation with a Licensed Insolvency Trustee (LIT): The first step is to seek professional advice from a Licensed Insolvency Trustee. An LIT is a qualified professional who can assess your financial situation, guide you through the process, and help you decide if a consumer proposal is the right solution for you.
- Develop a Proposal: Working with your LIT, you will create a formal proposal outlining your financial situation, including your debts, assets, income, and a proposed repayment plan.
- Submission to Creditors: Once the proposal is prepared, your LIT will submit it to your creditors. Creditors will have 45 days to vote on whether to accept or reject the proposal. If the majority of your creditors (in dollar value) approve the proposal, it becomes legally binding on all creditors.
- Stay of Proceedings: When your proposal is filed, an automatic “stay of proceedings” comes into effect, providing immediate relief from creditor actions.
- Regular Payments: You will be required to make regular monthly payments to your LIT as outlined in the accepted proposal.
- Completion and Discharge: After you have completed all the required payments and obligations under the proposal, you will receive a Certificate of Full Performance, and you will be legally discharged from your remaining debts.
Filing a consumer proposal in Victoria BC, can be a life-changing decision that empowers you to take control of your financial future. It offers a viable alternative to bankruptcy, allowing you to consolidate debts, protect your assets, and regain peace of mind. If you find yourself overwhelmed by debt, don’t hesitate to seek the guidance of a Licensed Insolvency Trustee to explore your options and start your journey toward financial freedom. Remember, help is available, and you can build a brighter and more stable financial future for yourself. Book a free consultation now!