A consumer proposal is the only government debt relief program that can eliminate unsecured debts and stop creditor actions like a wage garnishment and collection calls.

Consumer Proposals eliminate unsecured debt

Consumer proposals eliminate most unsecured debts. Consumer proposals are an excellent way to consolidate credit card debt, payday loans, outstanding bills and other unsecured credit.

Unsecured Debts

  • Credit cards
  • Lines of credit
  • Personal loans
  • Payday loans
  • Income tax debts

An individual can file a consumer proposal as a form of debt relief if their total debts do not exceed $250,000 not including mortgages on a principal residence.  If your unsecured debts exceed this amount, talk to us about a Division I proposal which is also an option available to consumers under the Bankruptcy & Insolvency Act.

What about secured debts?

Secured debts are guaranteed by an asset. If you stop making payments on a secured debt, then the creditor has the legal right to take possession of the agreed asset and can resell it to recover their loan.

Some examples of secured debts are:

  • Car loans – secured by the car
  • Mortgages – secured by the house

Secured creditors are notified if you file a consumer proposal, but they do not receive any money from the actual proposal. If you file a consumer proposal you can choose to either continue paying your secured creditors, and can keep the asset, or stop paying the secured creditor and surrender the asset to the creditor.

Consumer Proposal and student loans

Just like in a bankruptcy, student loans will be automatically discharged in a consumer proposal as long as you have been out of school for at least seven years. If so, your student loan debt is included with your proposal and will be eliminated upon completion of all of your payments.

Even if you have not stopped studying at least 7 years ago, you may still find relief from student loan debt by filing a consumer proposal:

  • Since your other debts will be eliminated by filing a consumer proposal, your cash flow may improve enough to make meeting your student loan payments easier;
  • While you are in a proposal or a bankruptcy there is a stay of proceedings, so creditors are not able to pursue you for any debt, including student loans. Your choices are to continue paying, or to stop making payments against your student loans during your proposal. Be aware however that not paying will let the interest and payments accumulate, so you will potentially owe more when the proposal is completed.

What debts are not eliminated in a Consumer Proposal?

A consumer proposal deals with most unsecured debts however it will not:

  • Eliminate support payments or alimony obligations;
  • Eliminate court fines and penalties;
  • Eliminate debts due to fraud;
  • Deal with student loans if you have been a student within the last 7 years.

Ready to eliminate your debt?

If you feel making a consumer proposal in Ontario let us help you negotiate a deal to eliminate your debts with your creditors.

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