David Sklar & Associates Inc.

Consumer Proposal & Bankruptcy Trustees
Serving the Greater Toronto Area

Debts in Consumer Proposals Toronto

When filing a Consumer Proposal in Toronto (and any other part of Canada) it is necessary to understand the different types of debts that can be included in a proposal.

Secured and Unsecured Debts

There are two main types of debt: secured and unsecured.

Secured debts are debts where a loan or credit has been secured by assets. For example, a home mortgage is usually a loan that has been secured against the home, where the lender has the tightly-regulated right to take possession of the home if the loan is defaulted on, to recover the money owing them.

Unsecured debts are debts where no specific asset has been used to guarantee the loan. Most credit cards, personal loans, and utility bills fall into this category. Income taxes are also considered unsecured debts.

While unsecured creditors do not have rights to specific assets, they normally have the right to sue for outstanding debts.

Consumer Proposals Only Cover Unsecured Debts

Secured debts are not part of a Consumer Proposal.

Normally, in order for a proposal to be accepted by creditors, the proposal must be offering to repay more than the creditors would get if the debtor was to go into bankruptcy. It is necessary to fully disclose assets, secured loans, income, unsecured loans, and all financial information when preparing a proposal.

Special Unsecured Debts – Not Included in Consumer Proposals

There are several types of ‘special’ unsecured debts that a debtor is not released from at the completion of the Consumer Proposal. The creditors for these special types of unsecured debts receive their portion of the proposal payments, but at the end of the proposal, any balance owing after receipt of their dividends, remains outstanding.

• Student Loans – where it has been less than seven years since the individual stopped being a student


• Child Support Payments


• Alimony


• Court Fines

Filing a Consumer Proposal in Toronto

If you are considering filing a Consumer Proposal in Toronto, you will need to work with a licensed Trustee in Bankruptcy. Under the Bankruptcy and Insolvency Act - Trustees in Bankruptcy are the only ones allowed to file and administer Consumer Proposals.

The Licensed Debt Professionals™ at David Sklar & Associates, Trustee in Bankruptcy, offer a free initial consultation at all six of their Greater Toronto offices. During your consultation, they will review your finances in detail, and discuss all of your options. To book your free consultation, call 416-498-9200.