FAQs Archive - Page 4 of 6

Q: How does a consumer proposal work in Canada?

If you live or work in Canada and have Canadian debt, you are eligible to file a consumer proposal, however, it is up to your licenced insolvency trustee (or accredited credit counsellor) to determine if it makes sense for you to file. In general, you can expect the following of a consumer proposal in Canada: Your total debt amount will be reduced You will make a single monthly payment You will have up to 5 years to repay Creditors will stop collection calls/letters Creditors will not be able to garnish wages You will not lose your house or vehicles You will not lose your RRSPs, RESPs, or TFSAs

Q: Why do people file consumer proposals?

In addition to reducing how much debt you owe, consumer proposals offer several legal benefits such as: stopping wage garnishment, halting a pending small claims case, or nullifying an existing judgement. Consumer proposals also offer additional benefits to those who--because of high earnings or valuable assets such as a house--cannot file personal bankruptcy without penalty.

Q: How much does a consumer proposal cost?

How much you pay is calculated based on how much you earn, how many family members are dependant on your income, how much (if any) equity value you have in your home or other assets, and lastly, how much debt you must repay. In all situations, you can expect to pay between 30% to 100% of your debt plus the cost of filing, which is $1500 regardless of total debt or province filed.

Q: Will ALL debt management programs affect my credit score?

There will be some impact to credit in a debt management program, but it will be less than a consumer proposal or bankruptcy and have a shorter record.