Understanding consumer proposals
A consumer proposal is a formal, legally binding document. When filing for a consumer proposal, you will need the assistance of a Credit Counsellor or trustee who will help you develop a proposal that offers all your creditors a percentage of what you owe them in a set amount of time, usually a five year period in which you have to repay.
When is a consumer proposal appropriate?
In order to ensure that filing for a consumer proposal is really the best option in your situation, set up a meeting with a certified and registered credit counselor.
1. What a consulting firm would do for you is help you evaluate your financial circumstances and explain in detail all the pros and cons of each options so that you can solve your financial problem more efficiently.
2. Not only that, the consultancy firm or trustee will allow follow through with you all the processes involved in filing a consumer proposal, its requirements, submissions and then later develop a proposal plan that works best for you and your creditors.
Consumer Proposal Default
There may come a point where you may feel you will not able to continue your monthly payments to your creditors as promised in the proposal you chose, so will your consumer proposal default? And how will you know if it has defaulted? Your consumer proposal will be in default if:
You miss a total sum of three monthly payments that you required to make as per your consume proposal terms and conditions, or
Your required payments are overdue or in arrears for a period of more than three months, your consumer proposal will go in default.
If you fell victim to any of the two conditions, your consumer proposal will be deemed or annulled and your creditors will once again be able to implement collection to recover their debts and with interests from the date when you filed the proposal and not from the annulment date. Also if you went bankrupt at the time of filing a consumer proposal, you will automatically become a bankruptcy again if your consumer proposal defaults.
Consumer Proposal Revival
In cases when your consumer proposal is deemed or annulled but you weren’t bankrupt, it may be a possibility to revive your consumer proposal and make up all your missed payments. In order to do so:
1. Contact your credit counselor or trustee to notify all your creditors within a period of 30 days of annulment that the consumer proposal will be revived automatically after 60 days from the date of annulment unless any of them objects to it.
2. In case the creditors don’t file an objection or notice, the consumer proposal is automatically revived, but is there are any objections; there will be no automatic revival.
3. But you still want to revive your consumer proposal after objections have been made by your creditors, as a final resort; Talk to your credit counselor, who will help you to make an application to the court.
