A Consumer Proposal is an interest-free settlement offer made to all of your creditors. Debts can be reduced up to 85%, depending on your unique situation.
Consumer Proposals (“proposal”) are the main alternative to filing an assignment in bankruptcy. A consumer proposal is an arrangement between you and your creditors which enables you to pay a portion of your debts over an extended period of time. The amount that you pay and the length of time you pay this amount is determined in a consultation with a trustee in bankruptcy who acts as the Administrator of your consumer proposal and is based on the amount of your income living expenses and any other financial responsibilities you have. A consumer proposal is also called a “Debt Consolidation Arrangement”.
All time(Schedules) sequences start from the date of the signing of the documents by the individual who is filing the assignment in bankruptcy. This normally takes place a few days after the initial meeting with the Trustee. Prior to signing the papers to file the assignment in bankruptcy, each person must have an assessment meeting with the Trustee. The assessment meeting will take place at the time of the initial meeting or at the time the documents are signed for the bankruptcy.
Preparing Yourself for Your First Meeting With Us? What documents do I bring to the first meeting with the Trustee in Bankruptcy.
For income tax preparation you must provide the Trustee with income information, i.e., the most current pay stub or an income statement if self-employed, U.I. information, welfare, and support paid/received by court order or agreement. Note: you should supply the Trustee with a copy of the court order or signed agreement for alimony or child support.
The bankruptcy documents will be submitted to the Official Receiver’s Office (Industry Canada, Bankruptcy Division). Within five days after the bankrupt has signed his/her papers, a notice will be mailed to all of the creditors advising them of the Bankruptcy. The purpose of this notification is as follows:
Immediately after you sign your papers you should notify any of your creditors who have post-dated cheques that they should return these cheques to you and not cash them. Also, if any creditor has a pre-authorized payment, this authorization must be cancelled by you, including those that may be made on your credit cards (which should be turned over to the Trustee upon signing your papers).
The first counselling meeting takes place approximately 30 days after the signing of the original papers for the Bankruptcy. The location of the first counselling meeting for personal bankruptcies is normally the Trustee’s office. If you fail to attend the counselling session, you will not be entitled to an automatic discharge and will be required to attend a court hearing to deal with your discharge.
Depending on the causes of the Bankruptcy or the individual problems that are present, the counselling session will take place in the Trustee’s office or be delegated to an outside agency (e.g. credit counselling, Alcoholics Anonymous, Gamblers Anonymous, etc.). If a Bankrupt person fails to attend a counselling session, he/she is not entitled to receive an automatic discharge from bankruptcy.
If creditors request the first meeting, you will be required to attend a meeting and you will be notified of the date and time.
If problems are extreme a meeting with the Official Receiver may take place. The need for such meetings will be discussed with individuals as needed.A period of time is now allowed to enable the initial administration of the bankruptcy to be completed. This can involve the preparation of Income Tax Returns, the return of property, which belongs to a secured creditor, as well as any other matters to which the Trustee is required to attend as part of his duties. If you have forgotten to declare assets that you own, or debts that you have, please contact our office immediately.
On a monthly basis throughout the 9-month term of the Bankruptcy, you will be asked to complete a Monthly Statement of Income and Expenses. The purpose of this monthly statement is to allow the Trustee to monitor your financial situation during the bankruptcy. If you have surplus income on a regular basis, you will be expected to contribute a portion of the surplus to your creditors while you are in bankruptcy. At least three months before the discharge hearing date you will be asked to come to the Trustee’s office to complete certain forms needed by the Trustee to prepare his report for your application for discharge from your bankruptcy. At this time you will also have the second counselling session, which is required by the Bankruptcy and Insolvency Act. You will receive a letter of instructions from the Trustee with respect to this meeting and the completion of your bankruptcy. If you fail to attend this meeting, you are not entitled to receive an automatic discharge from your Bankruptcy – a hearing must be scheduled in court for your discharge from bankruptcy. It is not uncommon for your discharge from bankruptcy to be delayed up to ten (10) months while waiting for a court date. Note: you will not receive your discharge if the Trustee’s fees are not paid.
During the 8 week period prior to the discharge hearing, a report is prepared by the Trustee and submitted to the Official Receiver and the court with respect to all matters known to the Trustee up to that time. A recommendation will be made based on the conduct and co-operation by the bankrupt, which can affect the discharge of the bankrupt. The result of this report is that the discharge procedure (if the Trustee is able to report favorably on the conduct of the bankrupt) is in process.
The automatic discharge hearing date for people filing bankruptcy for the first time is 9 months after the bankruptcy has been filed. The bankrupt will not normally be required to attend the discharge hearing unless a creditor has objected to their discharge or some other matter has come to light, which would indicate that the bankrupt person should not be given an absolute discharge. Other matters are listed in the booklet, which is given to every person at the start of the bankruptcy. If the bankrupt is receiving an absolute discharge, the papers take approximately 30 days after the discharge hearing to be prepared and forwarded to the bankrupt. If this is a second bankruptcy, the discharge will take place 24 months after the bankruptcy has been filed.
It is quite common after the bankrupt has been discharged for the Trustee still to be completing certain of their duties. The most common is the completion of the Income Tax Return for the calendar year during which the bankruptcy occurred. Once the entire administration of the bankruptcy is completed, the Trustee must be discharged. A notice is sent to the bankrupt as to when this is occurring. It is not uncommon for the discharge of the Trustee to take place as long as 11⁄2 years after the debtor has been discharged.
Please note that any income tax refunds up to the end of the year in which you file your bankruptcy and GST Credits until the Trustee’s discharge will be sent to the Trustee for distribution to your creditors. GST refunds cannot be paid to your creditors and will be refunded to the bankrupt person unless the funds are required for Trustee’s fees and disbursements.
Please make sure that the Trustee is aware of where you are living and working and your current telephone numbers at all times up to the date of both the bankrupt’s discharge and the Trustee’s discharge. This will allow for your file to be completed in the shortest possible time.
When you make a payment to the Trustee, please make your cheque, money order, etc., payable to “Rumanek & Company LTD., In Trust.” Please make sure that your full legal name (or that of the bankrupt if you are paying for someone else) is on the cheque or cash receipt when payments are made.
If you have any difficulties at any time throughout the bankruptcy, please contact the Trustee’s in office.
If you have any questions or would like to chat with us about our Consumer Proposal solutions, then simply contact us by clicking below.