For individuals who are facing debt problems - such as difficulty meeting all payment obligations, juggling bills or “borrowing from Peter to pay Paul" - a Consumer Proposal is an alternative to bankruptcy when there is an ability to repay a portion - and in some cases all - of the debt.
Imagine that you are struggling to pay the minimum monthly payment obligations to a number of creditors. You know it would be easier if you could just have one monthly payment. Perhaps you try to obtain a consolidation loan. But what if the bank turns you down for the consolidation loan?
A Consumer Proposal is a formal alternative to bankruptcy that falls under the provisions of the Bankruptcy and Insolvency Act. Under a Consumer Proposal, individuals can settle or repay their unsecured debts on reasonable terms with no interest. Moreover, individuals receive creditor protection during the term of the Consumer Proposal, meaning that creditors cannot take any further action to collect the debt. Specifically, payment to the creditors stop, collection calls stop, wage garnishment and other legal actions stop.
A Consumer Proposal must be filed through a Licensed Insolvency Trustee, whose job is to conduct an assessment of the individual; prepare necessary paperwork; help formulate the Consumer Proposal; report to and notify the creditors of the Consumer Proposal filing; monitor, receive and distribute payments under the Consumer Proposal; and provide two mandatory financial counselling sessions.
There is no specific formula for determining the amount payable under a Consumer Proposal. In formulating the terms of the Consumer Proposal, consideration is given to your income and expenses, family situation, number and nature of creditors, and other relevant factors. A Licensed Insolvency Trustee has the experience to assist you in making a Consumer Proposal that will be acceptable to your creditors, as well as reasonable for you to be able to fulfill its terms.
Is a Consumer Proposal right for me?
You should talk to a Licensed Insolvency Trustee about whether a Consumer Proposal is right for you if any of the following apply: