At MORATAYA Corp. Debt Solutions, we’ll go over your debt situation with you and give you the best professional advice regarding a consumer proposal. We will guide you through the process from beginning to end.
To file a consumer proposal you must owe $250,000 or less to your creditors, (not including your mortgage of principal residence), and you must be unable to pay your debts in full. If the amount is over $250,000 a Division 1 proposal would then applies.
Once you file a consumer proposal, your creditors have 45 days to consider whether to accept, re-negotiate or reject your proposal. In order to be accepted, creditors representing a majority of the dollar value of your debt must accept the offer. This is also known as a simple majority.
Interest stops and there will be only 1 monthly payment that must be made once a month. This will be divided amongst all of your creditors. At the same time, you must continue to make payments to your secured creditors (mortgage, car loan, etc.) as usual.
We do not want you to suffer from financial hardship again, so during the process of your consumer proposal we will show you how to budget and to live within your means. You’ll also learn how to stretch and save your money while protecting your savings from any unexpected events.
If the consumer proposal is rejected we will contact your creditors to renegotiate new terms. In many cases increasing your payment by a small amount per month may be enough to get your creditors to accept the consumer proposal. You also have the option of filing for bankruptcy protection. You’ll have the upper hand here since your creditors will know that if they don’t accept your proposal you may file for bankruptcy protection. This encourages creditors to accept reasonable settlements.
Can I pay off my Consumer Proposal sooner?
Once a consumer proposal is accepted, it becomes totally flexible and it can be paid off faster if possible. As soon as you make the last payment, you will be given a certificate of full performance and all of the unsecured debts included in your proposal will be erased.*
What happens if I can no longer make my monthly payments?
If you fail to keep the terms of your consumer proposal, such as falling behind 3 monthly payments, the proposal may be annulled. Once a proposal is annulled, your protection is lifted and your creditors would have a claim against you for the amount owed to them before the proposal was made minus any amount paid to them during the time when the proposal was active.
Can I keep my assets?
One of the greatest advantages of filing a Consumer Proposal is that you get to keep all of your assets, including your house, car, investments, and even tax refunds.
What happens to my credit score?
Your credit rating will be an R7 while your consumer proposal remains active and for 3 years after making the last payment, or 6 years from the date it was filed whichever comes sooner. (An R1 rating is the best while an R9 is the worst.)
Which debts are erased in a Consumer Proposal?
Most unsecured debts can be included in a Consumer Proposal
Lines of credit, bank overdraft
Income tax, HST, payroll deduction
Student loans (more than 7 years out of school)
Secured creditors are notified when you file a consumer proposal, but they do not receive any money from the actual proposal. When you file a proposal you can choose to either continue paying your secured creditors and keep the assets or stop paying them and the assets will be returned. Any deficiency balance owing to the secured creditor can be included in your consumer proposal.