Government Debt Settlement Program Explained

Fong and Partners Inc. is licensed by Industry Canada (license number 1815)

Your debts can be settled for as little 35% of what you owe – simply, quickly and legally.

You can start the process with just $100. Here is how it works:

  • There is a legal proceeding called a Consumer Proposal which allows a debtor to repay only some of her debts – it is a settlement
  • The Consumer Proposal can be paid in monthly installments up to a maximum of 60 months
  • Once the Proposal has been paid in full, the balance of the debts are legally discharged
  • A Consumer Proposal is not a bankruptcy. However, only a government licensed bankruptcy trustee can administer a Proposal
  • We notify your creditors of your Proposal by fax or mail and they have 45 days to review it. If they have no issues with it, then it is deemed to have been legally accepted by your creditors at the end of the 45-day period
  • Creditors will generally accept a Proposal if the settlement is 35% of the total amount owed
  • Once the Proposal is filed, your creditors are legally prohibited from contacting you and initiating or continuing any legal proceedings to collect their debt
  • While you wait out the 45 days, you make no payments to your creditors or to us. You only starting making your proposal payments to us after your creditors have accepted the Proposal.
  • The Proposal payments go towards our fees and the money distributed to your creditors. Our fees are calculated according to a government tariff (usually about 10% of the total debt owed).

Case Study – Cindy

Cindy owes $50,000 in credit card debt and wants to file a Consumer Proposal to settle her debts. She meets with a trustee who determines that a Proposal of 35% of her total debts would be acceptable to her creditors.

$50,000 x 35% = $17,500 – total settlement to be paid

She can afford to pay $292/month over 60 months

The trustee’s fees under this proposal are approximately 10% of the total debts owed: $50,000 x 10 = $5,000

Payment under proposal $17,500.00
($292/month x 60 months)
Trustee fees per gov’t tariff (5,000.00)
Distributed to creditors: $12,500.00
Cindy’s total debt: $50,000.00
Return to Cindy’s creditors: 25%

So to summarize Cindy’s situation, here are the advantages of a settlement through a Consumer Proposal:

  • Cindy wasn’t required to pay all of her debts
  • Upon filing the Proposal, Cindy’s creditors were legally prohibited from initiating or continuing collection proceedings against her. The legal term for this is called a “stay of proceedings”
  • Cindy wasn’t required to pay a fee to the trustee. The trustee’s fees are paid from the Proposal payments.

If you are interested in finding out if a Consumer Proposal is the best option to deal with your debts, please contact us:

Phone: (416) 260-3264

© Copyright Fong and Partners Inc 2010.