Can I Avoid Bankruptcy With a Consumer Proposal?

How to Avoid Bankruptcy in Canada

For certain individuals who wish to avoid bankruptcy, receive protection from creditor harassment, and get out of debt can avoid bankruptcy with a consumer proposal. If you feel like there is no alternative to bankruptcy a trustee in bankruptcy can help you explore whether a consumer proposal could work for you. If you have a job and a steady income but are struggling to pay the minimum payments on your debt or are facing creditor threats of wage garnishment or collection lawsuits, a consumer proposal might be your best option for getting out of debt with a proposal to your creditors. A consumer proposal gives you a chance to repay your debt in a manageable debt repayment plan and allows you to avoid bankruptcy. The popularity of consumer proposals are increasing each year as more people seek this powerful bankruptcy alternative. In many cases, you can avoid bankruptcy with a consumer proposal.

What is a Consumer Proposal?

A consumer proposal is a formal debt repayment offer made through the BIA (Bankruptcy and Insolvency Act) and administered by a government regulated consumer proposal administrator; only a bankruptcy trustee can act as a proposal administrator. If your debts are under $250,000 you are eligible to file a consumer proposal as a way of getting out of debt. You must have a steady income and offer your creditors more than they would be paid if you were to go bankrupt, including any surplus income payments or assets you would lose. For example, if you have a car worth $20,000 that is not protected by the bankruptcy exemptions and must pay $600 a month in surplus income payments for 21 months your creditors would require more than $20,000 and $12,600 in surplus income payments. For example, if you have a car worth $20,000 that is not protected by the bankruptcy exemptions and must pay $600 a month in surplus income payments for 21 months your creditors would require more than $20,000 and $12,600 in surplus income payments. In total you would have to offer your creditors more than $31,600 in your consumer proposal. Our proposal administrators will make a proposal with you that has a high likelihood of being accepted. The administrator will sit down with you and discuss your financial situation, your family size, other expenses and income to determine a fair proposal offer for you and your creditors.

Structuring Your Consumer Proposal

In order to make a consumer proposal with your creditors you must use the services of a consumer proposal administrator or bankruptcy trustee. Only a bankruptcy trustee can act as a consumer proposal administrator under the Bankruptcy and Insolvency Act. Before a proposal is structured, the trustee, acting as your proposal administrator, will schedule a confidential initial evaluation with you to determine if you are a good candidate for a consumer proposal. In certain cases the trustee might advise you to seek other debt relief options such as an informal proposal or going bankrupt. One of the ethical requirements of a trustee is to provide you with the best advice even if it means you won’t use the trustees services. Therefore, you can rest assured that you are getting the best advice possible from a trustee. However, if the trustee believes that a proposal can be viable for you, she or he will help you structure a fair consumer proposal. The administrator will work with you every step of the way to ensure your proposal is acceptable and you can avoid bankruptcy.

Avoiding Bankruptcy With a Proposal

Avoiding bankruptcy with a consumer proposal is possible for many individuals that have the cash flow required to make a fair proposal. The term of a proposal cannot exceed 5 years. You might end up repaying only 30% of your debt. A consumer proposal can help people get out of serious debt for as little as $200 or $300 a month.