I spoke with Joyce (not her real name) yesterday.

She was currently going through credit counselling, but wanted to know if a consumer proposal might be better for her now that her income has decreased.

We started by looking at the differences between credit counselling and a consumer proposal.

Rebecca Martyn Windsor Bankruptcy Trustee

Rebecca Martyn

Credit counselling was an option for Joyce when she could pay her debts each month. At that time, she just needed help with negotiating a manageable payment plan. With the help of a non profit credit counsellor she proposed a payment plan to each creditor and each creditor then accepted or rejected her plan. Joyce found that some of her creditors agreed to the payment plan and one creditor did not. She had planned to make the agreed payments until it was paid in full. Her concern was that the creditor who rejected the plan is still able to get a court order to garnishee her wages.

We then discussed a consumer proposal. A consumer proposal is a payment plan Joyce can offer her unsecured creditors with my assistance. Once she signs the necessary documents, we mail her consumer proposal to her creditors. The creditors receive 1 vote per dollar owed. At the end of the voting period of 45 days, the votes are tallied.

If the majority of the voting creditors agree to the consumer proposal after another
15 day waiting period to allow for court review if required, the proposal is officially accepted. It is then binding on all unsecured creditors, even the creditors who voted no or who did not vote. The creditor cannot vote no and still try to collect the debt. Once the proposal has been completed in full, certain debts such as student loans that are less than 10 years old will still have to be paid.

Since Joyce’s income has decreased and she is concerned about the possibility of future garnishments, she decided a consumer proposal was a better option for her.

To discuss if a consumer proposal is right for you, call me at 310-PLAN (310-7526, no area code required) or E-mail me to arrange a free initial consultation.