Consumer Proposals

Would you like to keep all your assets and get rid of all your debts through an affordable monthly payment plan?

If you have money problems then there is a tremendous plan for you to deal with your debts by making an offer of settlement to your unsecured creditors.  These Consumer Proposals were introduced by the Government of Canada in 1992 and are extremely popular with persons having financial problems and wishing to avoid bankruptcy.


Why should you avoid bankruptcy?

 If your debts are high and your income available to service your debts is low, realistically you should do something about your debts.  The greatest undesireable consequence of bankruptcy is that you don't know how long it will last and you don't know what it will cost you.  You can completely avoid this uncertainty by offering a fixed payment plan to your creditors in a Consumer Proposal.

 A Consumer Proposal is not a bankruptcy.  It is a great alternative to bankruptcy.  It gives you peace of mind and a fresh start.  You propose to pay amounts that are affordable to you, and you are permitted to pay it off early.   Consumer Proposals include your income tax debts, your credit card debts, your lines of credit, your payday loans, and more.  A great stress will be lifted from your shoulders when your consumer proposal is filed because these creditors are then legally prevented from bothering you.  This is debt relief at its best! 


Consumer Proposals have wide acceptance

 Consumer Proposals to creditors are very widely accepted in Canada are are made only through Licensed Insolvency Trustees - everyone listed in this website.  When they help you with a Consumer Proposal filing, their proper title is "Administrator".

 Credit counselors cannot help you with Consumer Proposals.  Debt counselors cannot help you with Consumer Proposals.  Be wary of anyone that charges you a fee for advice regarding Consumer Proposals or debt settlements.  Whose interest are they working for?


The Steps to get your Consumer Proposal started

 It's kind of obvious, but to begin you must be insolvent - that is, you must have money problems.  You must not be able to pay all your bills when they are due.  Also, think about your bank account.  It should be with a financial institution to which you do not owe any monies, not even on a credit card with them.  If this means you should have a new account, then open one up and reidrect your cash flow.

Your debts must be less than $250,000 but you are also allowed to have additional secured mortgage debt on your principal residence.

 Make an appointment to meet with an Administrator - any of the Trustees in Bankruptcy listed in this website.  Perhaps meet with two and see where you feel more comfortable.  They will give you great advice, without cost or obligation, but they need your help.  Take with you to the meeting some paperwork regarding your debts, your assets, and your income.  The Administrator will let you know what additional information they need.  And they will let you know about your other realistic options.  Everyone's circumstances are a bit different. 

 After your meeting the Administrator will put together the necessary documents to be signed and you will meet again.

 Your honesty is absolutely necessary.  The following details are included in the paperwork you need to sign, so be sure to tell your Administrator about them:

At that meeting you will make a payment to the Administrator - your first payment under your Consumer Proposal.


Creditor Response

Your creditors decide whether to accept your Consumer Proposal.

Before your Administrator asks your creditors to accept your Consumer Proposal, he will prepare a report for creditors, showing the  advantages of your Consumer Proposal compared to the bankruptcy alternative.  A meeting will be set up for you to meet again with your Administrator, usually in about 45 days.

Although sometimes your Administrator will know the outcome of your Consumer Proposal very quickly, he will take a very careful look at your file in 45 days to measure the creditor response.  Usually, the Administrator declares "Congratulations!".

However, sometimes after the 45 days have passed, the response from creditors is negative.  Your Administrator might be required to call a meeting at which a vote would be taken by your creditors.  Check with your Administrator, but if there is a meeting you should usually plan to attend.  When creditors vote the decision is made by the majority of the dollars voted.  If you attend the meeting, then you have an opportunity to amend your Consumer Proposal if it appears it would be rejected by creditors.

If creditors reject your proposal, then for you to be free from your debts your best decision might be for you to go bankrupt.  This is another discussion you would have with your Administrator.



After you have completed your Consumer Proposal you will receive a Certificate of Full Performance of Consumer Proposal stating you are released from all your unsecured debts except those listed in section 178 of the Bankruptcy and Insolvency Act (see below).

A few months after completing your Consumer Proposal you should obtain your credit report to make sure everything is reported accurately.


Debts that survive your Consumer Proposal

The Government of Canada established that some types of debts must be paid and cannot be settled through Consumer Proposals or through bankruptcy.  These are known as "section 178 debts" and most people do not have these types of debts.

Tell your Administrator if you have any of the following types of debts:

If you have a mortgage as well as further debts to the mortgage lender then gather together all your mortgage papers.  Often when there is a home equity line of credit (HELOC) your mortgage agreement can secure your lines of credit and credit card debts to that lender.  Your Administrator can discuss with you any ramifications.


If you would like to erase your debts through a Consumer Proposal to your creditors, contact by phone or email one of the Licensed Insolvency Trustees listed. 

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