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How Does A Consumer Proposal Work?

How Consumer Proposals Work and What Our Clients Say About the Process

As Canadians finances are continuously under pressure, more are choosing to file a Consumer Proposal as a way to get relief from your unmanageable debt. This debt relief option is now considered the number one alternative to Bankruptcy.

Government approved, this debt settlement program helps you get out of debt sooner, and in most cases, repay less than you owe. Here’s a look at how it works, who can file, and the benefits of filing a Consumer Proposal.

What is a Consumer Proposal?

A Consumer Proposal is an agreement that you and your Licensed Insolvency Trustee negotiate with your creditors to reduce the debt you owe. It can eliminate a significant portion of your debt and give you manageable payments to repay the remaining amount.

How does a Consumer Proposal work?

Consumer Proposals deal with unsecured debt. Common types of debt are credit card debt, lines of credit, unsecured loans, and payday loans. If an asset secures your debt, like your home or vehicle, your creditor can take the security and sell it to repay your loan. With unsecured debt, they don’t have that option.

It is a legally binding agreement between you and your creditors. To start the process, your first step is to contact a Licensed Insolvency Trustee (LIT). The government regulates LITS, and they must act in your best interests when providing advice. Your LIT will work with you to understand your situation and recommend the best solution for your debt,

Your LIT may recommend a Consumer Proposal as a debt solution. If you agree, they will file it with the Office of the Superintendent of Bankruptcy. Filing will stop creditors from taking payments. After your LIT files your Consumer Proposal, it will also stop collections, legal action, and garnishment of your wages.

The agreement offers to settle your debts for a lower amount. It asks your creditors to accept less than you owe in return for payments or a lump sum on the remaining balance. Your creditors will write off the rest of your debt.

The proposal typically includes information about your situation, explaining why you need to file. These details help your creditors decide whether to accept the offer.

After filing, your creditors have 45 days to accept or reject your proposal. If they accept it and don’t apply to have a court review it, your Consumer Proposal takes effect 60 days after filing.
However, your creditors may reject your offer. So, what can you do if your Consumer Proposal isn’t accepted? The three most common options are:

  • Renegotiate the offer. If your creditors counteroffer or reject your initial submission, your LIT can submit another.
  • File for Bankruptcy.
  • Find another solution.

Benefits of a Consumer Proposal

Filing a Consumer Proposal can provide you with debt relief while repaying your creditors some of what you owe. Your payments will be manageable, reducing some of your financial stress.. As a borrower, you will:

  • Repay a lesser amount if your creditors agree.
  • Pay off what you owe with a lump sum or make affordable payments.
  • Keep your assets.
  • Make the same payments, regardless of your income, until you pay it off.
  • Have all legal action, collection calls, and wage garnishees stopped.

The advantage for your creditors is they will receive some of the money you owe. If you file for Bankruptcy, they’ll need to write off the entire amount of your debt and receive very little or nothing.

Why you might need a Consumer Proposal

Sometimes it’s hard to know if you need debt relief or if other options might help you pay off the amount you owe. Your personal and financial situation will often be a good indicator of the right solution for you.

Debt problems are usually due to a change in your circumstances. Sometimes these issues occurred in the past, and things are more stable for you now. On the other hand, you may still be recovering from setbacks.

A job loss, loss of income or reduced income, repaying tax debt, student debt, illness or injury, or a change in your family situation can all lead to a financial shortfall. If you haven’t recovered from a financial setback, reducing your debt load can help relieve the financial strain you’re experiencing.

An LIT can provide you with the best options for debt relief. Although you may be hesitant to reach out, doing so can give you the solutions you need to eliminate your financial stress.

Don’t let fear stop you

Don’t let fear stop you from getting the debt help you need. You might not want to meet with a LIT because you’re afraid they will insist you file for Bankruptcy, judge you or charge high fees you can’t afford.

None of this is true. Bankruptcy is typically the last solution a LIT will suggest. They understand that people have financial difficulties and will find the best solution for you. Finally, there is no fee for the initial consultation. Your LIT will let you know what you’ll need to pay, depending on your chosen solution.

Here are a few of our past clients’ experiences:

If you want someone to help with your financial situation, please see Mr. Adamson. It was the best call I ever made. He is very very helpful and understanding. Also helps you to make good choices about your financial situation. I will forever be thankful for his help. If I could give 10 stars I would.

Debra P.
6/23/2022 (Kitchener/Waterloo Office)

These people are wonderful to deal with. I had to go this route a while back after I was involved in an accident. They are very professional and they are very caring. If I were to ever have to go this route again I would absolutely use these guys. They treat you like a human being and they have compassion for your situation. You cannot go wrong with this agency!!!

Nathan B. 
1/5/2022 (Windsor Office)

John and Christine made a very difficult experience very comfortable for us. They put us at ease making the experience easier to deal with. When Covid hit we dealt primarily with the St. Thomas office. All the employees there are top notch and were always so willing to answer our questions. I cannot say enough positive things about this business. They all made a very unpleasant situation easier to deal with. Kudos to the entire office.

Vicki B.
7/10/2021 (London South Office)

Many people facing financial difficulty experience the same concerns. However, our client testimonials demonstrate our clients’ relief after contacting us for help.

Our LITS at Adamson and Associates are licensed and trained to find a solution for your debt. Reach out to us today at 519-310-5646 for a free consultation. We will work with you to get rid of your debt so you can get a fresh start.

John Adamson, Licensed Insolvency Trustee Ontario

John Adamson, CPA, CMA

John is a Licensed Insolvency Trustee (1994), a Chartered Insolvency and Restructuring Professional (CIRP – 1994), and a Chartered Professional Accountant with a Certified Management Accounting designation (CPA, CMA – 1992). His experience includes more than 25 years of helping individuals, small businesses, their owners and even lenders, find solutions to their debt problems.

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