(music) Meet Mary. Mary took a job right out
of college but recently… …she has had to take a
lot of time off to care for her sick husband, Paul. With reduced income and
their debts mounting, they are now
considering bankruptcy. Their first step was to visit
a Licensed Insolvency Trustee, a professional who is
licensed by the Office of the Superintendent
of Bankruptcy Canada. To their surprise, the trustee
told them that bankruptcy may not be necessary. The trustee says that
Mary and Paul could prepare what is called… …a “consumer proposal.” This is an offer to creditors
to pay back a percentage of what they owe over a
period of up to five years. There are advantages to
filing a consumer proposal, the trustee tells them. For example, they get
to keep their possessions and the proposal binds all
creditors to the agreement. To get things underway, the
trustee explains that Mary and Paul must provide a
complete list of what they own and what they owe. Using that information,
the trustee will put a proposal together based
on their ability to pay. The proposal will then
be filed with the Office of the Superintendent
of Bankruptcy Canada, the federal organization
that regulates Licensed Insolvency Trustees. Once it is filed, Mary
and Paul will stop making payments directly to their
unsecured creditors. The trustee also explains that,
if creditors are garnishing her wages or suing them,
those actions will stop, too. Once the appropriate papers
are filed with the Office of the Superintendent of
Bankruptcy Canada, the trustee will then
submit the proposal to the couple’s creditors. The creditors will
then have 45 days to accept or reject the offer. If creditors appear
unsatisfied with the proposal, the trustee may also
negotiate amendments such as higher payments to creditors. But if the proposal is rejected,
Mary and Paul are told they’ll have to look at other options to
solve their financial problems. This may include
declaring bankruptcy. If the proposal is accepted
Mary and Paul will then be responsible for making
periodic payments to the trustee who will use that
money to pay the creditors. Further, they will be required
to adhere to any other conditions in the proposal. They will also have to attend
two counselling sessions to help them get back
on their feet financially. If they meet the conditions,
they will be legally released from the debts that were
included in the proposal. Mary asks about
their credit rating. Yes, it will be
affected, she is told. But once the terms of
the proposal are met, they will be able to start
rebuilding their credit and their financial future. If you are facing
financial uncertainty, having a Licensed Insolvency
Trustee prepare a consumer proposal for you is just one
of several options available. Visit our website
where you can use our searchable database to find a
Licensed Insolvency Trustee, the only professional who can
file a consumer proposal or bankruptcy application
in your name. This is one of a series of
videos available on our website. (music)