Consumer Proposal Services in British Columbia, BC

Navigating Consumer Proposal Services in British Columbia, BC: A Comprehensive Guide

Navigating the complex world of debt can be overwhelming, especially when faced with unmanageable financial obligations. For individuals struggling with debt in British Columbia, BC, Consumer Proposal Services offer a viable solution to consolidate credit and settle debts without resorting to bankruptcy 1 2 3. A Consumer Proposal is a legally binding agreement between a debtor and their creditors, filed by a Licensed Insolvency Trustee, which can potentially reduce debt by up to 80% while allowing the individual to keep their assets 1 4.

This comprehensive guide will explore the ins and outs of Consumer Proposal Services in British Columbia, BC, covering the process of filing a consumer proposal, its benefits, and its impact on credit. It will also compare consumer proposals to bankruptcy, showcase success stories, answer frequently asked questions, and provide guidance on finding a Licensed Insolvency Trustee in BC. By the end of this article, readers will have a clear understanding of how Consumer Proposal Services can help them achieve debt forgiveness and financial stability through a structured debt consolidation program 1 2 3 4.

Understanding Consumer Proposal Services in British Columbia, BC

Consumer Proposal Services in British Columbia, BC offer a valuable debt relief option for individuals struggling with unmanageable financial obligations 1. A Consumer Proposal is a legally binding agreement between a debtor and their creditors, filed by a Licensed Insolvency Trustee (LIT), which can potentially reduce debt by up to 80% while allowing the individual to keep their assets 1 3. This unique tool allows a person to consolidate their debt legally, without resorting to bankruptcy or credit counselling programs 3.

Key aspects of Consumer Proposals in BC include:

  1. Debt Consolidation: Consumer Proposals can consolidate various types of debts, such as consumer and business debt, income tax debts, student loans, ICBC debt, secured debts, and debt for a business for which the individual has signed a personal guarantee 3 6 7.
  2. Eligibility: To qualify for a Consumer Proposal, you must be an individual who resides in Canada or carries on business in Canada, owing between $1,000 and $250,000, excluding the amount of your mortgage on your principal residence 2 7 11 18.
  3. Process: A Consumer Proposal must be filed through a Licensed Insolvency Trustee (LIT), who will guide the individual through the process and ensure compliance with rules and regulations 2 7 12 13. The proposal outlines an offer to creditors to repay a portion of the debt over a specified period, usually up to five years 2 18.
  4. Benefits: Consumer Proposals offer several advantages, such as reducing the amount of debt to be repaid, stopping interest and collections, protecting assets from creditors, and avoiding bankruptcy 1 3 8 17. They also provide budgeting and money management counselling throughout the process 16.
  5. Costs: The cost of setting up a Consumer Proposal is around $1,500, with an initial setup fee and a 20% administration fee on future payments 8 10 18.

It is essential to note that while Consumer Proposals can be an effective debt relief solution, they are a permanent public record and may impact professional licenses and future employment opportunities 8. Consulting with a Licensed Insolvency Trustee is crucial to understanding the implications and determining if a Consumer Proposal is the most suitable option for your financial situation 9 15.

The Process of Filing a Consumer Proposal

The process of filing a Consumer Proposal involves four main steps 3:

  1. Free, confidential debt consultation: The initial consultation with a Licensed Insolvency Trustee (LIT) is free of cost and without any obligations. A licensed debt help professional will assess your financial situation, including income, assets, monthly expenses, and debt 20.
  2. Preparing and filing the proposal: If you choose to file a Consumer Proposal, your LIT will help you prepare a proposal to your creditors, documenting the amount of debt you will repay, how much you will pay each month, and how many months you will be making payments 20. The proposal is filed under the Bankruptcy and Insolvency Act and must be approved by the majority of the creditors to become effective 11. Your LIT will file your Consumer Proposal with the court and send a notice to all of your creditors 20. By law, collection action against the individual must cease once their Consumer Proposal has been filed 3.
  3. Creditor vote and approval: Creditors have 45 days to vote for or against the proposal, and a majority (50% +1) of creditors must vote in favor for the proposal to be approved 14. The Creditor Vote involves creditors reviewing and voting on Consumer Proposal terms, typically accepted or renegotiated 1 21. Once a 51% majority of your creditors accept the Consumer Proposal, it will be approved by the court and legally binding upon all of your creditors 20.
  4. Completing the terms of the Consumer Proposal: You will make one equal monthly payment to your LIT over the length of time determined in the proposal (no more than five years) 20. The Payment Process requires making payments as agreed, attending two credit counselling sessions, and having the option to pay off the Consumer Proposal early 1 21. Upon completion of your proposal payments, a Certificate of Full Performance is issued, and your dischargeable debts are legally extinguished 6.

It’s important to note that:

  • An individual keeps all of their assets when they file a Consumer Proposal 3.
  • If an individual has a vehicle financing agreement or a mortgage, they can choose to continue with those arrangements outside of their Consumer Proposal 3.
  • If an individual is making a Consumer Proposal, their spouse would not be impacted in any way, unless their spouse is legally responsible for the debts as a co-signer, co-cardholder, or guarantor 3.
  • Missing more than three payments in a Consumer Proposal can lead to its collapse, allowing creditors to apply for wage garnishment and apply interest charges 14.

Benefits of Choosing a Consumer Proposal

Consumer Proposals offer numerous benefits for individuals struggling with unmanageable debt in British Columbia. Real-life success stories, such as Ian, a resident of British Columbia who consolidated his debts and avoided bankruptcy through a Consumer Proposal 22, and Wendy, a Canadian consumer who became credit card debt-free after completing her five-year payment plan early 23, demonstrate the effectiveness of this debt relief option. MNP Ltd. has helped countless individuals in British Columbia achieve a debt-free life through Consumer Proposals 24.

Key benefits of choosing a Consumer Proposal include:

  1. Lower monthly payments: You repay only a portion of your debt, which can be as little as 30% of the original amount 17 25.
  2. No surplus income: Unlike bankruptcy, your monthly payments do not increase with your income 17 19.
  3. Creditor protection: Once approved, a Consumer Proposal stops collection calls and garnishments 17 32.
  4. Interest freeze: Once a Consumer Proposal is filed, interest on your debts stops accruing 17 13.
  5. Early payment allowed: You can pay off and complete your Consumer Proposal early if you have extra money 19 22.
  6. Shorter credit rating impact: A Consumer Proposal has a shorter effect on your credit rating compared to bankruptcy, staying on your credit report for six years from the date you file the proposal or three years from the date you complete it, whichever is shorter 19 7.
  7. Fixed payment: Your required payment never changes in a Consumer Proposal, unlike in bankruptcy where the monthly payment can increase if your income increases 19 18.
  8. Asset protection: You get to keep all your assets and tax refunds 16 34.

Additional advantages of Consumer Proposals include:

  • Consolidated payment 31
  • Protection from collection acts 32
  • Pausing active collection on student loan payments 10 18
  • Keeping credit cards with nil balances 21
  • Offering higher recovery to creditors than bankruptcy 17

It is important to note that while Consumer Proposals provide significant benefits, they are more expensive than other debt relief options 35, create a permanent public record 36, and have a negative effect on credit 37. However, for many individuals facing unmanageable debt, the advantages of a Consumer Proposal outweigh the drawbacks, providing a viable path to financial stability and a debt-free future.

How Consumer Proposals Impact Your Credit

Filing a consumer proposal results in an R7 rating on your credit report for 6 years from the date of filing or 3 years from the completion date, whichever comes first 5. The R7 rating indicates that you are making regular payments through a consumer proposal with your creditors 28. Once the consumer proposal is completed, it will be replaced with an R9 code, indicating the successful completion of the proposal 28.

The presence of a consumer proposal on your credit report may:

  • Make it challenging to secure new credit or loans during this period 28
  • Result in higher interest rates or fees for any loans or lines of credit you qualify for 29
  • Require you to be perceived as high-risk by lenders 29

To improve your credit score after a consumer proposal:

  1. Create a budget and make timely payments 28
  2. Obtain a secured credit card or small personal loan to re-establish a positive payment history 29
  3. Monitor your credit report and keep debt levels low 28
  4. Diversify credit types and be patient in rebuilding your creditworthiness 28

Comparing the credit impact of consumer proposals and bankruptcy:

Consumer Proposal Bankruptcy
R7 rating for 3 years after completion or 6 years after filing 31 32 R9 rating for 6 to 7 years after completion 31 32
Allows you to keep more assets 30 May require surrendering non-exempt assets 31
Less effect on credit score compared to bankruptcy 30 Remains on credit report for 6 to 7 years after completion 31

The Credit Repair Process involves receiving a Certificate of Full Performance and having the notice removed from the credit report three years after completing payments 1 21.

Consumer Proposal vs. Bankruptcy: What’s the Difference?

Consumer Proposals and personal bankruptcy are both debt management options available through a Licensed Insolvency Trustee (LIT) 32. While they share some similarities, such as offering protection from creditors and the courts, freezing interest charges, and requiring the completion of two credit counselling sessions 31, there are significant differences between the two.

Feature Consumer Proposal Bankruptcy
Debt Limit Maximum of $250,000 in unsecured debt (excluding mortgage) 31 Minimum of $1,000 of unsecured debt, no maximum limit 31 32
Payments A negotiated settlement, usually starting at 20% of your debt, divided into monthly payments based on what you can afford 31 32 Monthly payments based on your average monthly income, in accordance with government regulations 31 32
Duration Up to 5 years, no penalty for early termination 31 32 9 months or 21 months based on income 31 32
Reporting No monthly reporting duties required 31 Monthly reporting on budget and income required 31
Assets Keeps all assets 31 32 Surrenders non-exempt assets 31 32

A Consumer Proposal may be a better option when:

  • You want a less serious debt forgiveness program than bankruptcy 32
  • You want to protect your assets and keep them separate from the agreement your LIT negotiates with your creditors 32
  • It is more beneficial to both debtors and creditors 32

On the other hand, bankruptcy may be the best choice when:

  • You have a large amount of debt with little income or no ability to make payments 32
  • You need a faster process, as bankruptcy takes less time than a Consumer Proposal 32
  • You do not want to repay a portion of your debts 32

It is important to note that for a Consumer Proposal to be legally binding, the creditors who hold the majority of the debt must agree to the proposal 3 8. Once agreed, the individual repays the agreed amount over a maximum of 5 years 3 8. The cost to file a Consumer Proposal is about $1,500, with an initial setup fee and additional fees for administration (20% of future payments) 3 8.

Success Stories: Consumer Proposals in Action

Real-life success stories demonstrate the effectiveness of Consumer Proposals in helping individuals overcome unmanageable debt. One such example is an individual from Ontario who shared their experience of filing a Consumer Proposal, which they believe saved their life 33. Prior to filing, they had been struggling to stay afloat financially, constantly moving money from one lender to another in an attempt to manage their debt 33.

By choosing to file a Consumer Proposal, this individual was able to:

  • Consolidate their debts into a single, affordable monthly payment
  • Stop the cycle of borrowing from one lender to pay another
  • Protect their assets from seizure by creditors
  • Avoid the more severe consequences of filing for bankruptcy

The individual’s story highlights the potential of Consumer Proposals to provide a lifeline for those drowning in debt. It illustrates how this debt relief option can help people regain control of their finances, offering a path towards a more stable and secure financial future 33.

Top Questions About Consumer Proposals Answered

  1. What are the alternatives to a Consumer Proposal?
  • Bankruptcy: A legal process that can provide relief from most unsecured debts, but may require the surrender of assets and has a longer impact on credit 21.
  • Orderly Payment of Debts (OPD): Available in certain provinces, this program allows for the consolidation and repayment of debts over a specified period, with interest rates reduced or eliminated 21.
  • Debt Management Plan (DMP): A voluntary arrangement with creditors to repay debts in full, often with reduced interest rates and waived fees, managed by a credit counselling agency 21.
  • Consolidation Loan: Combining multiple debts into a single loan with a lower interest rate, which can simplify repayment but does not reduce the overall debt amount 21.
  1. How do I know if a Consumer Proposal is the right choice for me? Factors to consider when deciding if a Consumer Proposal is the best option include:
    • The amount and types of debt you have
    • Your income and ability to make monthly payments
    • Your assets and whether you want to protect them from seizure
    • The potential impact on your credit score and future financial goals
    • The availability of alternative debt relief options and their suitability for your situation 21

    Consulting with a Licensed Insolvency Trustee can help you assess your financial situation and determine if a Consumer Proposal is the most appropriate solution for your needs 21.

  2. Can I include student loans in a Consumer Proposal? Yes, student loans can be included in a Consumer Proposal if they have been in repayment for at least seven years from the date you ceased to be a student 21. If your student loans do not meet this criterion, they will survive the Consumer Proposal and remain your responsibility to repay 21.

Finding a Licensed Insolvency Trustee in BC

Licensed Insolvency Trustees (LITs) are the only professionals licensed by the Canadian government to administer the full range of debt relief options, including Consumer Proposals and Bankruptcy proceedings 13. They follow a code of ethics outlined in the Bankruptcy and Insolvency Act (BIA), providing a standard for their services 13.

To find a LIT in British Columbia, you can:

  1. Search by name or location in the directory provided by the Canadian government 12.
  2. Browse all active LITs in the directory, which includes information about business offices, resident offices, non-resident offices, and head offices 12.
  3. Look for LITs offering services in corporate insolvency and consumer insolvency 12.
  4. Contact local BC Licensed Insolvency Trustee offices in various locations, such as Abbotsford, Burnaby, Chilliwack, Colwood, Kamloops, Kelowna, Richmond, Surrey, Vancouver, Victoria, White Rock, Maple Ridge, Langley, Nanaimo, New Westminster, and Port Coquitlam.

D. Thode & Associates Inc. is a firm of Licensed Insolvency Trustees (LITs) located in various parts of British Columbia, including Burnaby, Chilliwack, Duncan, Kamloops, Kelowna, Penticton, Surrey, Vancouver, and Victoria 34. To become an LIT, one must meet certain qualifications, such as being of good character and reputation, being solvent, completing the qualification program, passing the national insolvency exam and an oral board examination, passing the insolvency counsellor’s qualification course, and obtaining a minimum of 2,400 hours of insolvency experience 34.

MNP LTD is another licensed insolvency trustee company that offers debt relief solutions to individuals struggling with an overwhelming amount of debt 26 36. They have been providing professional debt help for over 50 years and are committed to guiding you towards a brighter financial future 26 36. MNP LTD offers personal insolvency counselling, free and confidential consultations, and services such as Consumer Proposals, Declaring Bankruptcy, and Consolidating Credit 26. They have various locations throughout British Columbia, including Fort McMurray, Prince Albert, Melfort, Lloydminster, Saskatoon, Humboldt, Edmonton, Leduc, Spruce Grove, Stettler, Yorkton, Moose Jaw, Regina, Red Deer, Swift Current, Drumheller, Peace River, Dauphin, Brooks, Medicine Hat, Airdrie, Calgary, Virden, Grande Prairie, Neepawa, Taber, Brandon, Souris, Lethbridge, Dawson Creek, Deloraine, Portage La Prairie, Killarney, Fort St. John / Northern BC, Winnipeg, Cranbrook, Steinbach, Prince George, Vernon, Quesnel, Kamloops, Kelowna, Williams Lake, Burns Lake, Vanderhoof, Penticton, Smithers, Squamish, Abbotsford, and Langley 36.


In summary, Consumer Proposal Services in British Columbia offer a viable solution for individuals facing unmanageable debt, providing a legally binding agreement that can reduce debt by up to 80% while allowing them to keep their assets. By working with a Licensed Insolvency Trustee, debtors can navigate the process of filing a Consumer Proposal, which involves a free consultation, preparing and filing the proposal, creditor vote and approval, and completing the terms of the proposal. While Consumer Proposals impact credit scores, they offer numerous benefits, such as lower monthly payments, creditor protection, and a shorter credit rating impact compared to bankruptcy.

Ultimately, the decision to pursue a Consumer Proposal should be made after careful consideration of one’s financial situation and consulting with a Licensed Insolvency Trustee. By understanding the ins and outs of Consumer Proposal Services in British Columbia, individuals can make informed decisions about their debt relief options and take steps towards a more stable financial future. With the help of Licensed Insolvency Trustees across the province, those struggling with debt can find the support and guidance they need to achieve a debt-free life.


What are the eligibility criteria for filing a consumer proposal in British Columbia?

To be eligible to file a Consumer Proposal in British Columbia, an individual must have a debt ranging from $1,000 to $250,000, excluding the mortgage on their primary residence. For those with debts exceeding $250,000, a Consumer Proposal is still an option, but it will be subject to a different set of regulations.

What are the potential disadvantages of entering into a consumer proposal?

One of the main disadvantages of a Consumer Proposal is that it typically takes longer to fulfill than declaring bankruptcy. While extending the repayment period results in lower monthly payments, it also means a longer duration of debt repayment. However, should your financial situation improve, you have the option to settle the Consumer Proposal ahead of schedule. It’s important to note that your credit rating will be impacted by entering into a Consumer Proposal.

Is it necessary to include all debts in a consumer proposal?

When filing a Consumer Proposal, it is mandatory to include all unsecured debts. Selective exclusion of specific creditors is not permitted because a Consumer Proposal is a legal mechanism designed to address all creditors equitably.

Is there an income limit that could disqualify you from making a consumer proposal?

There is no income threshold that disqualifies you from proposing a Consumer Proposal. The payment amount based on surplus income is determined at the onset of the proposal and remains constant for its duration. Therefore, fluctuations in your income, whether increases or decreases, do not affect the agreed-upon payment amount during the Consumer Proposal period.


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