Consumer proposals are often thought of as an insolvent debtor’s last resort before having to file for bankruptcy.  Learn more about consumer proposals and what you need to know on how to file a consumer proposal.

What is a consumer proposal?

A consumer proposal is a formal and legally binding process administered by a  Licensed Insolvency Trustee.

Your trustee works with you and your creditors to develop a proposal whereby you agree to pay your creditors a percentage of what’s owed to them, and your creditors agree to forgive the balance.

What happens when I file a consumer proposal?

Your trustee will file your proposal with the Office of the Superintendent of Bankruptcy (OSB).

Immediately upon filing, you will receive legal protection from your creditors.

This puts a stop to all lawsuits, wage garnishments, collection calls, and other efforts your unsecured creditors may have undertaken to get you to repay your debt.

Your trustee submits the proposal directly to your creditors, including a report on the current financial difficulties you are facing to justify the need for it.

Creditors have 45 days to either accept or reject the proposal. (You’ll need a dollar majority vote of your creditors to get it approved.)

If accepted, you will:

  • Keep your assets (so long as you keep up with payments to your secured creditors).
  • Have to repay only a portion of your debt.
  • Be expected to pay a lump sum or periodic proposal payments to the trustee to carry it out.
  • Adhere to any other conditions set out in the proposal.
  • Attend two financial counselling sessions.

If your proposal is not accepted, you can:

  • Make changes to the proposal and resubmit for your creditors’ approval.
  • Consider another option to resolve your debt problem, including filing for bankruptcy.

Is a consumer proposal the right choice for me and my family?

Set up a meeting with a trustee today to discuss your personal circumstances.

Your trustee will evaluate your current financial situation and explain the pros and cons of all available options that may help you solve your financial problems.

If you decide to go through with filing a consumer proposal, your trustee will work with you to develop a proposal that works for both you and your creditors.

Photo by Mari Helin-Tuominen on Unsplash