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If you file a consumer proposal, can the creditors garnish your wages while the process is being completed? It mentions on here, that you are to stop paying to build up a settlement account? What prevents creditors from coming after the money via a court action etc..

Posted from: Ontario

One Response to “CP”

A licensed trustee said...

You’ve received some mixed information – it sounds like you’ve been dealing with a debt consultant and not a trustee. Let’s see if I can clear things up…

When you file a consumer proposal a “Stay of Proceedings” is automatically created that stops all legal action by your creditors (it won’t stop Family Court from garnisheeing for support) – in other words your creditors cannot garnishee your wages once the proposal has been filed.

There is no “settlement account” in a consumer proposal. You make all of your payments to a licenced trustee that in turns makes regular payments to your creditors. The average proposal takes 4 years to complete. You do not make any payments directly to your unsecured creditors once you file the proposal – to do so can get you into trouble.

Make sure you are dealing with a trustee – if you are not then either you cannot file a consumer proposal or the people you are dealing with will have to refer you to a trustee in order to file – in that case, why bother with the “middleman” that can’t actually solve your problem.