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Consumer Proposals

A consumer proposal is a formal debt settlement option legislated under the Bankruptcy and Insolvency Act and is filed with a licensed insolvency trustee. This option stops further creditor action and allows your debts to be compromised.


Filing personal bankruptcy allows you to be released from most of your debts. It is a formal process under the Bankruptcy and Insolvency Act and is filed by a licensed insolvency trustee.

Consolidation Loans

Debt Consolidation Loans are a popular debt management option for people who are experiencing money problems. Consolidation Loans consolidate your personal debts into one monthly payment, reduce interest charges and will not damage your credit rating.

Credit Counselling

Credit Counsellors can help you with budgeting and money management, filing a Debt Management Plan or by helping you communicate with your creditors. It typically makes sense to use a credit counsellor if you have a relatively small amount of debt.

Dealing With Collection Agencies and Wage Garnishment

Collection Agencies may take legal action against you if you owe money to your creditors and do not make payments. Collection Agencies must follow rules outlined in the Collection Agencies Act, which is regulated by the government.

Rebuilding Credit

Credit rating is a fluid concept and is always changing. No matter what you do, including filing personal bankruptcy or a consumer proposal, you can always rebuild your credit rating.

Consumer Proposals

A consumer proposal:

  • Prevents creditor action including collection activity and wage garnishments
  • Stops all interest charges
  • Allows you to compromise (pay a portion acceptable to your creditors and yourself) your total debt

It is the right option if you:

  • Have a consistent source of income
  • Are able to make monthly payments
  • Are not able to make the required monthly payments on current debts

Advantages to you:

  • Avoid bankruptcy
  • Consolidate debt payments into one monthly payment
  • Compromise the amount you owe
  • Make personal budgeting easier
  • Protect assets from creditors
  • Does not require you to submit monthly income reports


Advantages of filing bankruptcy:

  • Prevents creditor legal or collection action against you
  • Allows an honest, but unfortunate debtor, to get a fresh start
  • Discharges you from most of your debts

Disadvantages of filing bankruptcy:

  • Assets may be affected
  • Payments are variable, based on income
  • Results in worst credit rating

May be the right option if you:

  • Cannot pay your bills
  • Do not have assets which would be at risk
  • Have low income and are unable to make a consumer proposal

Want to avoid filing bankruptcy?

If you need help dealing with your creditors, but don’t want to file personal bankruptcy we may be able to help you avoid bankruptcy by making a consumer proposal.

Cost to go bankrupt?

There is no set cost or fee for filing personal bankruptcy, though the typical minimum fee is $1,800 paid in nine monthly installments of $200 each. The maximum amount you pay is based upon your income and ability to pay. The surplus income formula used to calculate these payments is legislated under the Bankruptcy Insolvency Act and therefore the calculated payment amounts will be the same for all trustees.

How long is the bankruptcy process?

The length of the bankruptcy process is legislated under the Bankruptcy and Insolvency Act, and is determined by two factors:

  1. Have you ever been bankrupt before?
  2. Do you have surplus income?

Based on your answers to these questions the length of your bankruptcy process would be as follows:

  • First time bankrupt without surplus income 9 months
  • First time bankrupt with surplus income 21 months
  • Second time bankrupt without surplus income 24 months
  • Second time bankrupt with surplus income 36 months
  • Third time or more bankrupt 36+ months as determined by the court

Consolidation Loans

Consolidation loans aren’t a solution for everyone as they are:

Difficult to qualify for

  • Must have an excellent credit rating
  • Collateral is often required (house equity, car, etc.)
  • May need a co-signer

Not always a complete solution

  • Creditors will often consolidate their own debts but not others
  • Not a good option unless all personal debts are included

Not always affordable

  • Payments include 100% of amount owed plus interest
  • Higher payments than other debt settlement options

So, when is a Debt Consolidation Loan a good option?

  • More assets than personal debts (not insolvent)
  • High income and can afford to pay all debts including interest
  • Own assets that can be used as collateral for loan
  • An excellent credit rating

Credit Counselling

Welker & Associates Inc. provides two credit counselling sessions, as required under the Bankruptcy Insolvency Act, to aid in the financial rebuilding process, for everyone filing personal bankruptcy or making a consumer proposal.

Be wary of fraudulent credit counsellors.

Although some credit counselling companies are legitimate, there are many fraudulent credit counsellors who charge high fees, provide little or no service and warn against discussing your money problems with a licensed trustee in bankruptcy.

A credit counsellor has no greater ability to negotiate with your creditors than you do. The credit counselling industry is unregulated and anyone can claim to be a credit counsellor.

How to spot a legitimate credit counsellor:

  • Not-for-profit United Way sponsored agencies
  • Never charge fees upfront
  • Accredited by the Ontario Association of Credit Counselling Services (OACCS)
  • Recommend reviewing your situation with a licensed trustee in bankruptcy
  • No cost referral for you to meet with a licensed trustee in bankruptcy

Over the years, we have developed relationships with credit counsellors across Ontario. Find a trusted credit counsellor in your area.

Credit counsellors CAN help you by:

  • Providing budgeting and money management advice
  • Filing a debt management plan
  • Helping you communicate with your creditors

Credit counsellors CANNOT help you to:

File a consumer proposal

  • Deal with government debts
  • Compromise the total amount that you owe
  • Stop, by legislation, creditors from garnisheeing your wages

Dealing With Collection Agencies and Wage Garnishment

Once you’ve been contacted by a collection agency, it’s hard to get them to stop calling. In order to stop them from calling, you need to do one of the following:

What are the rules collection agencies must follow?

The Collection Agencies Act outlines rules collection agencies must follow and is regulated by the Ontario Ministry of Consumer and Commercial Relations.

A collection agency:

  • Must wait six days to contact you after sending you written notice of the name of the creditor, the balance owing and the name of the agency and its authority to demand payment
  • May not continue to contact you if notice was not received
  • May not suggest to you that a matter can be handled outside of court, if you send a registered letter disputing the debt
  • May not use threatening, profane, intimidating or coercive language, or use undue, excessive or unreasonable pressure
  • May not provide false or misleading information to any person
  • Must first send you notice, before recommending to a creditor that legal action be taken against you
  • May only contact your employer on one occasion to obtain your employment information
  • Cannot contact partners, relatives or friends to obtain your contact information, unless that person has guaranteed the debt

A collection agency cannot contact you:

  • If they have been notified by registered mail to communicate only with your lawyer
  • On a holiday or Sunday, except between the hours of 1 p.m. and 5 p.m
  • After initial verbal contact, more than three times in seven days without your consent (mail contact is excluded)
  • If they have been notified that you are not the debtor they are looking for
  • If a collection agency has engaged in any of these prohibited acts, you may file a complaint with the Consumer Protection Branch.

What is wage garnishment?

If you owe money to your creditors and do not make payments your creditors may take legal action against you. The result of this legal action is something called a judgment. A judgment is a court order that allows your creditors to deduct payments directly from your wages and to seize assets.

How do I prevent or stop creditors from garnisheeing my wages?

Filing a Debt Management Plan with a credit counsellor does not stop wage garnishment. However, the following actions stop wage garnishment even if the process has already begun:

  1. Making a consumer proposal
  2. Filing personal bankruptcy
  3. Paying creditors in full

Who is vulnerable to wage garnishment?

Anyone that receives employment income and/or owns property.

Who is not vulnerable to wage garnishment?

Anyone that doesn’t receive employment income and doesn’t own property. E.g.:

people receiving pension income (disability, CPP, OAS etc.). These people are often referred to as being “creditor proof” or “judgment proof”. Just because creditors may not be able to garnishee your wages does not mean you’re free of creditor harassment, it simply means that your creditors cannot collect money from you by legal means at this time.

Rebuilding Credit

Why is credit rating a poor indicator of financial health?

Credit rating only focuses on payment history and is not related to your net worth. Many people borrow from one creditor to pay another which allows them to temporarily maintain their “excellent” credit rating, however their financial health is actually getting worse and they end up going further and further into debt.

How can I find out what is listed on my credit report?

Contact one of the credit reporting agencies: or

How do you read your credit report?

Your credit report is like a report card and each creditor assigns a mark.

  • Marks include a letter and a number
  • The best credit ratings are R1 or I1
  • “R” applies to revolving lines of credit and credit cards
  • “I” applies to instalment payment loans like mortgages and vehicle loans
  • The number represents the period or periods between payments

How do I get a free credit report?

Complete the relevant form to receive your free credit report by mail:

How can I improve my credit?

Your credit rating is like a report card. Having money problems, filing personal bankruptcy or making a consumer proposal will result in a bad mark on your credit report card. Therefore to rebuild your credit rating you have to get as many good marks as possible. The only way to get a good mark is to borrow money and pay it back within the time restrictions. The way to get a bank or credit card company to lend you money despite your poor credit rating is to:

  • Have a co-signer
  • Obtain a secure credit card

What are the risks of using a co-signer?

You and the co-signer become jointly liable for 100% of the debt. If you are unable to make payments, the co-signer will have to maintain the payments or his/her credit rating will be affected.

What are the differences between a cash card and a secured credit card?

Cash cards/pre-paid credit cards:

  1. Do not involve credit and therefore don’t improve your credit rating
  2. You deposit money into a “credit account” which is used to make purchases and must be refilled
  3. No monthly statements
  4. Offered by payday-loan companies

Secured credit cards:

  1. Involve credit and help to improve your credit rating
  2. Money is deposited with a bank or credit card company and held as collateral
  3. You will receive regular monthly statements and be required to make payments
  4. Offered by banks and other credit card companies

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