What is a consumer proposal?

A consumer proposal is a legal procedure that is governed by the Bankruptcy and Insolvency Act and that protects you against seizures, harassment and any recovery action from your creditors.

. Unlike a consolidation loan, the consumer proposal is not a loan of money with interest. Rather, it is an agreement with your unsecured creditors that will be administered and validated by a licensed insolvency trustee.

The consumer proposal will allow you to consolidate all your debts in order to make a single payment to your creditors, without interest. The maximum duration of a proposal is 5 years. This option also allows you to offer your creditors an amount less than what is owed and your creditors will be able to approve it as is, to ask to negotiate the proposed total or to refuse your proposal. In the majority of cases, the consumer proposal agreement is accepted since your creditors will be able to get more money than if you had gone bankrupt.

Unlike bankruptcy, this option ensures that you keep all of your assets including your property, car, investments and more.

Who is the consumer proposal for?

To be eligible for a Consumer Proposal, you must first be an insolvent person, whose total debts, excluding the mortgage on your principal residence, do not exceed $250,000 (or $500,000 in the case of a joint Consumer Proposal).

A consumer proposal is a good solution for anyone experiencing financial difficulties who wants to avoid bankruptcy.

What is the process of a consumer proposal?

First, the trustee (or an advisor) will assess your financial situation. This assessment will begin with the preparation of a list of your assets and debts, your budget and some relevant information related to your business.

Then he will explain your options, advantages, disadvantages and consequences so that you are fully aware of the process.

>. When you are ready to go ahead with the proposal, you will be required to sign several legal documents and these will be filed with the Office of the Superintendent of Bankruptcy and sent to your creditors.

. Your creditors will have 45 days to vote and/or request a meeting of creditors. At the end of that 45th day, if the trustee is not required to call a meeting, your proposal will be deemed to have been accepted.

If a meeting of creditors is called, you will have to be present, however, your creditors will only attend in exceptional circumstances. The creditors will send a voting form by fax, email or mail so that the licensed insolvency trustee can summarize the votes for and against the consumer proposal.

1. As a consumer debtor, you will have obligations to meet. In order to be eligible for your Certificate of Full Performance, you will have to : 
3. Attend two consultation sessions;
4. Make your agreed-upon payments under the consumer proposal ;
5. Report any significant negative changes to your financial situation.

After the completion of your obligations under your consumer proposal, the trustee will send you a certificate of full performance and you will be discharged from all your debts incurred prior to the date of your proposal with the exception of the debts referred to in section 178 of the Bankruptcy and Insolvency Act.

1. The ADVANTAGES of the consumer proposal : 
3. Only one reasonable monthly payment to be made.
4. An agreement to repay only a portion of your debts, without interest.
5. Keep your belongings (house, car, furniture and others).
6. Protection against legal proceedings including the seizure of your salary and assets.
7. Budget management consultations included in the process.
8. Your credit rating can be restored faster than a bankruptcy.