CP Consumer Proposal Information

Now that your proposal has been accepted, all that you need to do is continue to make your payments and complete both counseling sessions. We recommend being set up on pre-authorized payments so that you do not have to worry about dropping off your payments during business hours. If you are interested in completing your proposal more quickly, you may choose to set up your payments for weekly or biweekly withdrawals which result in extra payments being made each year. This is a great way to get ahead or simply a way to ensure if an emergency arises, you do not fall behind in your payments.

Yes, after your proposal has been accepted by your creditors, you may pay off your proposal at any time. We can set up a lump sum payment through pre-authorized payments or you can send in a cheque or money order. However, you must complete both counseling sessions before we can issue your Certificate of Full Performance.

No, there are no penalties for paying your proposal off early; it will actually speed up the process of rebuilding your credit. Once a consumer proposal has been completed, it will remain on your credit report for three years from the date of completion.

No, the terms of your proposal remain as filed with the Office of the Superintendent of Bankruptcy. The only circumstance where your terms may change is if you were to file an amendment to your proposal and it was accepted by your creditors.

Should you need to make a change to your payments due to an emergency or require a payment to be held, we ask that you call head office at 1-800-472-7775 ext 6000 and speak with one of the staff members in the proposal department, or email us at proposals@hoyes.com. Please note that should you need to hold a payment to a different day, payments are processed at 9:00 a.m. and therefore you would be required to let us know prior to that time.

You may apply for a mortgage or a car loan however it will be up to the institution whether or not to grant the funding to you. You must disclose that you are currently in a consumer proposal.

Once your proposal is accepted by the creditors, you are in control of your assets, so yes, you can sell your car or house, or cash in your RRSPs. However, here are some points to remember:

• If you cash in an RRSP you are liable for the taxes owing when you file your taxes next year. The bank may only withhold 5% or 10% of the amount you withdraw, but if you are in, say, the 30% tax bracket, you will owe the remaining amount when you file your taxes next year, so we strongly recommend that you set aside enough to pay your taxes if you cash in your RRSP.
• If you sell your house, you are responsible for paying the outstanding mortgage, property taxes, and any other registered liens or encumbrances. If there is “negative equity” in your house, meaning you sell your house for less than the amount required to pay the mortgage, real estate fees, legal fees, and other outstanding amounts, you are responsible for the shortfall (unless you surrendered the house prior to filing your proposal). Please contact our office if you have any questions.
• You may sell your car, but as with the house example above, if you owe more against your car than it’s worth, you are responsible for the shortfall, unless you surrendered the car prior to filing your proposal.

The best thing to do if your circumstances have changed and you are having a hard time making your payments is to call our office and book a meeting to meet with your Trustee to discuss what options are available to you. If you are a month or two ahead on your payments, you could defer payments for a month or two until you are working again. It’s important to remember that if you fall three months behind on your payments your proposal is automatically annulled, so we strongly recommend that you call our office before you get behind, so we can explore different options to get you back on track.

Co-signed debts: Any person or people who have co-signed and/or guaranteed any of my debts may be held responsible for such debts.

Secured creditors

• Keeping: If I have elected to keep a secured asset, I understand that I must be current with payments to the secured creditor now and in the future.
• Surrendering: If I have elected to surrender the asset to the secured creditor, I understand that I must co-operate with the secured creditor in returning the asset so that the debt will be included in the consumer proposal.
• Writs of execution registered against my assets prior to my filing may not be automatically removed even though the debt may be discharged. Further action may be required to have these items removed.

Undisclosed creditors: I am required to disclose all known creditors. If I have unintentionally forgotten about a debt that is outstanding today, I will advise the Trustee so that this creditor can be added to the consumer proposal.

If a creditor does not know about my bankruptcy, I may be held liable to pay that creditor the same dividend rate as the other creditors received from my bankruptcy pursuant to section 178 (1) (f) of the Bankruptcy & Insolvency Act.

Fine, penalty or restitution orders: Any penalty or fine imposed by a court, or any debt arising out of the recognizance or bail, or any aware of damages by a court in civil proceedings in respect of bodily harm, sexual assault or wrongful death. Reference: Bankruptcy & Insolvency Act, section 178 (1) (a)

Fraud & Misrepresentation: Any debt or liability arising out of fraud, embezzlement, misappropriation, or misrepresentation.

The government may consider over payments from various government programs to be a result of misrepresentation and may resume collections on all or part of the debt. Reference: Bankruptcy & Insolvency Act, section 178 (1) (d) and (e)

Student loans: Government funded or guaranteed student loans where there has been less than seven years from the date the government has recorded as my end of study date (when I ceased to be a full or part-time student) to today. Reference: Bankruptcy & Insolvency Act, section 178 (1) (g)

Any debt or liability for alimony or child support: Any family law support or alimony arrears and future obligations. Reference: Bankruptcy & Insolvency Act, section 178 (1) (b) and (c)

A creditor, or the Office of the Superintendent of Bankruptcy (OSB), or the trustee may request an examination under oath of a bankrupt or someone in a proposal.

In some cases an examination is requested if there are unusual transactions, such as complicated business issues or large debts.

In other cases the examination is completely random. The OSB routinely selects a random sample of insolvencies from all trustee firms and examines the debtor to confirm that all proper procedures were followed.

If you are selected for an examination, you are required to attend. If you don’t attend, it is likely that the OSB will oppose your discharge, and you would be required to attend a court hearing to receive your discharge.

If your are unable to attend the examination at the time and date set by the OSB, Hoyes Michalos does not have the authority to reschedule the examination, as the time and date is set by the OSB. However, you may contact the OSB directly and ask them to reschedule the examination to a different date. It will be up to the OSB whether or not they agree to your request.

The examination will be conducted by the OSB. A copy of the examination questionnaire can be found here.

The first dividend payment to your creditors begins after the administrative fees are paid. This can take between 1-1.5 years after the proposal is filed. Dividends are only disbursed to your proven creditors.

A proven creditor is a creditor who has proved to us the amount owed to them at the time you filed your proposal. The creditor must submit what is called a “proof of claim” in order to receive dividend payments from your proposal.

Your creditors have the entire length of your active proposal to submit a proof of claim.

Your creditors will receive dividends approximately every 6 months after the first dividend disbursement, as long as your payments are kept current, until your proposal is completed.

Provided that the debt for the creditor in question is an unsecured debt and does not fall under those debts not dischargeable under the Bankruptcy and Insolvency Act, it is still included in your proposal and you will not be responsible for it. Please refer to the sheet given to you at sign-up named “Debts not Discharged” should you have a question in regard to which debts are not dischargeable.

The Statement of Receipts and Disbursements (Form 14) is a report reflecting the receipts received to date in the proposal as well as how the funds have been disbursed to date.

The dividend sheet shows the total funds disbursed to your creditors (total payment) and to the Government (total levy). It also shows the current fund disbursed to your creditors (current payment) and to the Government (current levy).

A consumer proposal will include all of your income tax debt related to years prior to the calendar year in which your consumer proposal is filed.

For example, filing a consumer proposal today would deal with your tax debts up to December 31 of last year. It would not include tax debts related to this calendar year.

If you owe income tax for the year you filed your proposal, you are responsible for paying this debt unless CRA agrees at their discretion, to prorate the tax year and include your pre-proposal tax liability (amount owing up to the date you filed) in your proposal.

Generally, the answer is yes. If you filed a consumer proposal today and are entitled to a refund, most times you will receive it.

The exception to the general rule is if you had income tax debts from prior years. The Canada Revenue Agency (CRA) will withhold a refund related to the year your consumer proposal was filed up to the amount of the tax debts from prior years.

No. When you file a consumer proposal, you are responsible to prepare any outstanding tax returns and keep current with future income tax return filings. You must ensure you file your income tax returns by April 30th of each year.