How to File a Consumer Proposal

Filing A Consumer Proposal in Canada

Are you overwhelmed by your debts and looking for a solution to consolidate and reduce them? A consumer proposal could be the answer. In this comprehensive guide, we will walk you through the process of filing a consumer proposal and provide you with all the information you need to make an informed decision. From meeting with a Licensed Insolvency Trustee to completing the terms of your proposal, we’ve got you covered. Let’s dive in!


Section 1: Understanding Consumer Proposals

Before we delve into the steps of filing a consumer proposal, it’s important to understand what it entails. A consumer proposal is an alternative to bankruptcy that allows you to consolidate your unsecured debt and make affordable monthly payments or lump sum payments over a period of up to five years. It is a formal arrangement facilitated by a Licensed Insolvency Trustee (LIT) and offers several advantages over traditional debt consolidation methods.


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Section 2: Meeting with a Licensed Insolvency Trustee

The first step in filing a consumer proposal is to schedule a consultation with a Licensed Insolvency Trustee. During this meeting, the LIT will assess your financial situation, review all your debt relief options, and determine if a consumer proposal is the right solution for you. This initial debt assessment is typically free of charge and serves as an opportunity for you to ask any questions you may have.

Section 3: Determining the Offer and Payment Plan

Once you have decided to proceed with a consumer proposal, your LIT will work with you to determine the offer and payment plan that best suits your financial circumstances. This involves evaluating your income, assets, and debts to determine how much you can offer your creditors and how much your monthly payments will be. The goal is to find a balance that is affordable for you while still providing your creditors with a reasonable return.

Section 4: Preparing the Consumer Proposal Documents

After finalizing the offer and payment plan, your LIT will prepare all the necessary paperwork to document your consumer proposal. This includes providing information about your current financial situation, detailing the amount of debt you propose to repay, specifying the duration of the proposal, and outlining your monthly payment obligations. The LIT will guide you through this process and ensure that all the required documents are accurately prepared.

Section 5: Filing the Proposal & Creditor Protection

Once the consumer proposal documents are ready, your LIT will file them electronically with the federal government and the court. This filing grants you immediate creditor protection, known as a “stay of proceedings.” This means that your creditors can no longer pursue you for collection or take legal action against you. If a wage garnishment order has been issued, your LIT will arrange to have it stopped, providing you with much-needed relief from creditor harassment.

Section 6: Notifying Creditors and Waiting Period

After filing the proposal, your LIT will send a copy of it to all the creditors listed in your proposal. It’s essential to ensure that all your creditors are included, as any missed creditors can still contact you for payment. However, you can simply inform them that you are in a consumer proposal and direct them to contact your LIT for a copy of the proposal. Once notified, your creditors have 45 days to review your proposal and decide whether to accept it or request a creditors meeting.

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Section 7: Potential Meeting of Creditors

Creditors have the right to request a meeting to discuss your consumer proposal and ask questions. If creditors representing at least 25% of your total debts request a meeting, one must be held within 21 days. At this meeting, your LIT will attend with you and act as an intermediary to negotiate an offer that is agreeable to both you and your creditors. The goal is to reach a consensus that benefits all parties involved.

Section 8: Creditors Vote on the Proposal

If a meeting of creditors is not required, your consumer proposal is deemed to be accepted at the end of the 45-day waiting period. However, if a meeting is held, creditors will vote on whether to accept or reject the proposal. For the proposal to pass, a majority of the dollar value of your debts (at least 51%) must be voted in favor of it. Once accepted, the proposal becomes legally binding on all your creditors, even those who voted against it.

Section 9: Completing the Proposal Terms

Once your consumer proposal is accepted, you will begin making your agreed-upon monthly payments to your LIT. It’s crucial to fulfill your obligations and stick to the terms of the proposal. In addition to making payments, you will be required to attend two credit counseling sessions. These sessions are designed to provide you with valuable financial management skills and help you rebuild your credit history.

Section 10: Obtaining Your Certificate of Full Performance

Upon completing all the payments specified in your consumer proposal and fulfilling the terms of the agreement, you will receive a Certificate of Full Performance. This certificate serves as proof that you have successfully completed your consumer proposal and have fulfilled your obligations. It signifies that you are now debt-free and can start rebuilding your financial future.

Section 11: Rebuilding Your Credit History

Many people worry about the impact of a consumer proposal on their credit report. While it does affect your credit rating, most individuals find that they can begin improving their credit score during the consumer proposal process. One way to do this is by obtaining a secured credit card and using it responsibly. Additionally, the reduced debt burden allows you to allocate more funds towards savings, further strengthening your financial position.

Section 12: Frequently Asked Questions

Throughout this guide, we have covered the essential steps and information about filing a consumer proposal. However, you may still have some lingering questions. In this section, we address some common queries and provide answers to help you gain a better understanding of the process. Whether you’re wondering about the potential rejection of a consumer proposal, the impact on joint debts, or the inclusion of tax debts, we’ve got you covered.

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Filing a consumer proposal can be a viable solution for individuals seeking to consolidate and reduce their debts while avoiding bankruptcy. By following the steps outlined in this comprehensive guide and working closely with a Licensed Insolvency Trustee, you can navigate the consumer proposal process with confidence. Remember, it’s essential to seek professional advice and explore all your options before making a decision. Take control of your financial future and start your journey towards debt freedom today!

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I was feeling overwhelmed by my credit debt, constantly receiving calls and letters from debt collectors, which caused a great deal of stress. It seemed like there was no way out of this situation. However, I discovered Bankruptcy Canada while listening to my local talk radio station. This organization proved to be friendly, empathetic, knowledgeable, and professional, with extensive experience in their field.

During our initial meeting, they took the time to understand my debt and financial circumstances. They explained the various options available to me and helped create a personalized plan that would be most beneficial for my situation. With their assistance, I was able to avoid declaring bankruptcy by presenting a consumer proposal to my creditors. Fortunately, my proposal was accepted, and I am extremely relieved to finally be free of debt, all thanks to BankruptcyCanada. The burden on my shoulders feels significantly lighter now, and I truly believe that Bankruptcy Canada has the most skilled specialists in debt relief.