Who Can File a Consumer Proposal?

Generally speaking, a Consumer Proposal is a new arrangement with unsecured creditors whereby debts are consolidated, interest is stopped, and in most cases the total debt is reduced.  A Consumer Proposal is a popular alternative to bankruptcy, and every year more and more Canadians chose to file a Consumer Proposal over filing an assignment in bankruptcy.

So who can file a Consumer Proposal?  The following is  a summary who can file a  Consumer Proposal under Canadian insolvency legislation:

1. Must be a natural person (i.e., an individual vs. an incorporated company, which cannot file a consumer proposal);
2. Must be insolvent, which means the individual owes at least $1,000 and is unable to repay their debts in the ordinary course or whose assets, if sold at fair market value, are insufficient to retire the debt;  
3. Can be filed by an individual who is in bankruptcy (an accepted Consumer Proposal will annul a bankruptcy);
4. Can be filed jointly with a spouse if the debts are substantially the same; and
5. Debts must be less than $250,000, excluding debts owed on a principal residence (i.e., a mortgage).  If debts are greater than $250,000, the individual may file a Division I Proposal.

If you are having trouble repaying your debt and would like to know if you qualify for a  Consumer Proposal, speak with a Licensed Insolvency Trustee who will review your situation in detail and explain all of your options. 

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