FAQ about Proposals

Who can file a proposal?

A consumer proposal can be filed by an individual or couple who owe $250,000 or less, excluding a mortgage on a principle residence.

A division I proposal can be filed by an individual or a corporation and there are no upper limits on the amount owed.

Can I keep my house or vehicle if I file a proposal?

Yes. If you have a house or vehicle secured by financing or mortgage you can keep them as long as the loan is current and remains up to date. If your property has any equity you should discuss this with your trustee at your free consultation.

Will a proposal affect my credit rating?

Yes a proposal will affect your credit rating. The credit bureau will report the proposal on your credit report as an R7 credit rating and this rating will remain on your credit report for 3 years from the completion of the proposal. If you are behind on your payments or have accounts in collections, the proposal rating on your credit report may actually be an improvement.

Can I borrow again after filing a proposal?

Yes, credit can begin to be re-established once the proposal has been completed.

How much should I offer my creditors in a proposal?

Unfortunately, there is not a magic number to offer to have a successful proposal. However, a proposal shouldn’t offer creditors less than would be received if there was a bankruptcy. A fair amount would be determined based on an individual’s ability to pay, not the amount owed.

What is the difference between bankruptcy, proposals and credit counselling?

 

Bankruptcy

Proposals

Counselling

Has the ability to stop action by creditors

Yes

Yes

No

Can help arrange a repayment plan

Yes

Yes

Yes

Can stop interest / penalty charges

Yes

Yes

No

Licensed and Certified

Yes

Yes

No

Government Regulated

Yes

Yes

No

Can negotiate with creditors to reduce amounts owed

Yes

Yes

No

Can include Income tax debt.

Yes

Yes

No

The Law requires creditors to participate. 

Yes

Yes

No

Can Stop garnishments

Yes

Yes

No

Can Stop Judgments

Yes

Yes

No

Can Stop Legal Actions for the collection of debts.

Yes

Yes

No

How does Credit Counselling differ from proposals?

Credit counseling agencies cannot provide a guarantee the amount you owe will be reduced, interest will be stopped or creditors will stop calling sending letters or continuing legal actions. Arrangements with credit counseling agencies are not legally binding and will appear on your credit report for three years upon completion of the counseling program.

Credit counseling agencies also derive a large portion of their income by charging you fees on top of your total debt load and often receive rebates from the creditors that you owe. Credit Counselling agencies are not regulated by the government and in many provinces are registered as collection agencies.

Consumer proposals or division I proposals will stop interest, stop harassment from creditors and has the ability to reduce the total amount owed. A proposal is administered by a licensed Trustee who is required to follow government regulations.

Once a proposal is accepted by creditors it becomes legally binding and replaces any pre-existing contracts between the debtor and the creditors. A Trustee’s fees are subject to government tariffs and regulation and the Trustee does not receive any additional income or payment from creditors.

There are numerous differences between credit counselling programs and proposals. For more information please contact Allan Marshall & Associates Inc.

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