David Sklar & Associates Inc.

Consumer Proposal & Bankruptcy Trustees
Serving the Greater Toronto Area

Consumer Proposal Filing Rates in the Greater Toronto Area

Often, when people come to us about their unmanageable personal debt load, they are pleased to find that, depending on their situation, there are alternatives to Bankruptcy. One of the most important of these alternatives is a Proposal.

There are two types of Proposals for consumers: Consumer Proposals (with a maximum of $250,000 in liabilities) and Division I Proposals (usually over $250,000 in liabilities). The specifics of which type of Proposal is appropriate, and the debts that are used to calculate the proposal amount, must be determined with the assistance of a Licensed Bankruptcy Trustee.

Unlike Bankruptcies, with Proposals, people are released from their unsecured debts and keep their assets (as long as they continue to make payments on any secured loans for those assets) – in exchange for which, they make a legally binding agreement to pay a portion of their outstanding unsecured debt over a period of up to five years.

We have long been an advocate of Consumer Proposals over Bankruptcy – whenever possible, and recent statistics would seem to indicate that more people in the Greater Toronto Area are beginning to share our sentiments.

The following are Insolvency Statistics (Bankruptcies and Proposals are types of Insolvencies) from the Office of the Superintendent of Bankruptcy Canada which show an increasing trend towards the use of Proposals instead of Bankruptcies in the Greater Toronto Area:

2008:

	Insolvencies Filed by Consumers in 2008
Toronto (CMA*)	2008	2007	% Change	Assets Declared at the Time of Filing ($)	Liabilities Declared at the Time of Filing ($)
Bankruptcies	12,208	10,597	15.2%↑	$599,051,577	$1,346,769,762
Proposals	6,880	5,942	15.8%↑	$717,300,674	$815,129,572
*Census Metropolitan Area

2009:

	Insolvencies Filed by Consumers in 2009
Toronto (CMA*)	2009	2008	% Change	Assets Declared at the Time of Filing ($)	Liabilities Declared at the Time of Filing ($)
Bankruptcies	15,423	12,208	26.3%↑	$1,066,722,736	$2,105,734,292
Proposals	10,230	6,880	48.7%↑	$1,284,880,900	$1,421,788,380
*Census Metropolitan Area

2010:

At the time of this writing, the Proposal statistics for the year 2010 were not complete. The following are the statistics for the first six months of 2010:

	Insolvencies Filed by Consumers
Toronto (CMA*)	January 1, 2010 thru June 30, 2010	Assets Declared at the Time of Filing ($)	Liabilities Declared at the Time of Filing ($)
Bankruptcies	5,851	Not Available	Not Available
Proposals	5,850	Not Available	Not Available
*Census Metropolitan Area

Using the above statistics for the Greater Toronto Area, we see that:

• In 2007: 35.9% of Consumer Insolvencies were Proposals


• In 2008: 36.0% of Consumer Insolvencies were Proposals


• In 2009: 39.9% of Consumer Insolvencies were Proposals


• In the first six months of 2010: 50.0% of Consumer Insolvencies were Proposals

While these numbers are by no means statistical proof, we choose to view them as a hopeful trend – that may help more GTA residents keep their assets, get out of overwhelming debt and avoid Bankruptcy.

We know that no matter what the statistics say, the decision to file for a Proposal is not an easy one. At David Sklar & Associates, we work with our clients to help them fully understand all of their options and make an informed decision in their effort to move ahead with their lives.