Bankruptcy Alternatives Montreal

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Bankruptcy is a good option for those who need a financial fresh start, but it is not the only solution. Luckily there are some alternatives for those who do not wish to resort to bankruptcy.

One of the most common alternatives is a consumer proposal. Consumer proposals are ideal for those with debts in excess of $500 and who have the ability to pay it back, but need a prolonged period of time to do so. Consumer proposals are administered by the court, and are therefore legally binding.

Advantages include:

• Maximum period of 5 years
• Frozen interest from date of filing.
• If accepted by majority of creditors, considered acceptable by all.
• You can negotiate to pay only a fraction back.
• Wage garnishments end.
• Creditors are “stayed” from pursuing further legal action.

A bankruptcy trustee will begin by evaluating your financial situation so that they may determine how much you can afford to pay back each month. It is then up to your creditors to decide if that amount is acceptable.

In Montreal, if a majority of your creditors decide that your proposed amount is acceptable, it is considered acceptable by all. If there are no objections, the proposal is then approved by the court. However, if 25% or more of your creditors believe the proposal is not viable, you will need to attend a meeting of creditors. At this meeting your trustee will help you and your creditors agree on a workable amount.

During the course of the proposal, you are allowed to skip up to two payments, and they will simply be added onto the end of the proposal. If more than two are skipped, however, the proposal is annulled by the court and creditors can then apply to have your wages garnished. Interest charges will also be added to your debts.

A consumer proposal will also have an effect on your credit rating, as it will appear on the report for up to seven years.

Trustee fees are set up by the Superintendent of Bankruptcy, but usually your trustee will be paid out of the profits of the proposal.

If you are a resident of Montreal, Quebec, and believe a consumer proposal would be a good choice for you, please contact us immediately. We can review all possible alternatives, and help you make the right decision.

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