Consumer Proposal Services in New Brunswick

Navigating Consumer Proposal Services in New Brunswick: A Comprehensive Guide

Navigating through financial hardships can be an overwhelming experience, particularly when faced with a substantial amount of debt. For individuals in New Brunswick grappling with debt exceeding $10,000 but less than $250,000 (or $500,000 for couples), Consumer Proposal Services offer a legally binding agreement between the debtor and their creditors to pay off the debt within a specified timeframe 1. In 2021, the average debt load of those who opted for a consumer proposal surpassed $93,000, highlighting the significance of this debt relief option for many New Brunswickers 1.

This comprehensive guide delves into the intricacies of Consumer Proposal Services in New Brunswick, exploring the benefits, qualification criteria, and the process of selecting a Licensed Insolvency Trustee (LIT). We will also examine the key differences between consumer proposals and bankruptcy, life after a consumer proposal, and common challenges and solutions encountered during the process. By understanding the various aspects of Consumer Proposal Services, individuals can make informed decisions when seeking debt relief options, such as debt consolidation, debt management programs, or credit counselling, to navigate their way towards financial stability 1.

Understanding Consumer Proposal Services in New Brunswick

Consumer Proposal is a legal agreement that allows an individual to offer their creditors a portion of what they owe within a designated timeframe, typically five years 2. This process is governed by the Bankruptcy and Insolvency Act (BIA) and administered by a Licensed Insolvency Trustee (LIT) 9. The proposal is primarily based on an individual’s income, assets, and debts 9.

Consumer Proposals offer several advantages, including:

  • Protection from creditors and an end to collection calls, wage garnishments, lawsuits, and other collection efforts 2 4
  • Avoiding bankruptcy while retaining assets such as a home or car 2 4
  • Reducing debt repayment, often by up to 80% 2 10
  • Halting interest accumulation on unsecured debt during the proposal’s duration 2 4
  • Consolidating unsecured debts into one affordable monthly payment 3 11

However, there are also some disadvantages to consider:

  • Consumer Proposals are a public record and can impact credit scores, making it difficult to borrow money for several years 3
  • There are associated costs, such as LIT fees 3
  • Court approval is required, and creditors may reject the proposal 3
  • Some assets may need to be sold or included in the proposal’s value 3

To file a Consumer Proposal in New Brunswick, individuals must contact a Licensed Insolvency Trustee (LIT) for an initial consultation 4. The LIT will evaluate the individual’s financial situation and advise them on all available debt relief options 2. If a Consumer Proposal is deemed viable, the LIT will work with the individual to develop a tailored debt relief solution and submit the proposal to creditors for review 10.

Benefits of Consumer Proposals

Consumer Proposal Services in New Brunswick offer numerous benefits to individuals struggling with overwhelming debt:

  1. Debt Reduction: Consumer proposals can reduce unsecured debts by as much as 75% 15, allowing for repayment of only a portion of the total debt 17. This often results in lower monthly payments 17 and can help individuals become debt-free in 3 to 5 years 19.
  2. Asset Protection: Unlike bankruptcy, a consumer proposal allows individuals to keep their assets 16 21, including their home, car, and other possessions 6 9 11. This ensures that certain assets remain protected from creditor interests 20.
  3. Creditor Protection and Debt Consolidation:
    • A consumer proposal legally settles all unsecured debts, including those held by the Canada Revenue Agency (CRA) 15.
    • It immediately stops collection action from creditors 16, including collection calls, lawsuits, and garnishments 19.
    • All unsecured debts are consolidated into a single fixed monthly payment 15, making budgeting easier 21.
  4. Flexible Payment Terms:
    • Payment terms are flexible and can include making monthly payments over a defined period, cashing in RRSPs to fund a proposal, or offering a lump sum borrowed from family members 9.
    • The monthly payment is fixed, so the debtor doesn’t have to make higher payments if their income increases 16.
    • There are no additional costs or fees outside of the monthly payment 9.
  5. Credit Score Impact:
    • A consumer proposal results in less damage to credit rating compared to bankruptcy 15 11.
    • The record of a Consumer Proposal will stay on an individual’s credit report for 3 years after completion 9 11, allowing for faster recovery from overwhelming debt 15.
  6. Additional Benefits:
    • Debtors are not required to fill out monthly income and expense reports 16.
    • Interest is frozen, and no further interest is added to the debts 16 17.
    • Debtors can keep credit cards with nil balances 16.
    • Budgeting and money management counselling is provided throughout the process 16.
    • There is an option to pay out the Proposal early by increasing payments or paying a lump sum 16.

By offering a negotiated debt settlement between the debtor and their creditors 17, Consumer Proposal Services in New Brunswick provide a viable alternative to bankruptcy, enabling individuals to retain their possessions 18, improve their cash flow 22, and achieve debt relief once all obligations are met 6.

How to Qualify for Consumer Proposal Services

To qualify for a Consumer Proposal in New Brunswick, you must meet the following criteria:

  1. Insolvency: You must be insolvent, meaning you are unable to meet your debt obligations as they become due 2 23.
  2. Debt Amount:
    • You must owe less than $250,000 (excluding mortgage on your main residence) 2 24.
    • There is no specific minimum debt threshold, but consumer proposals are typically considered for individuals with unsecured debts of $1,000 or more 24.
  3. Eligible Debts:
    • Most unsecured debts are eligible for a consumer proposal, including credit card debt, personal loans, lines of credit, payday loans, some taxes, and student debt older than seven years 24.
    • Secured debts, such as mortgages and car loans, cannot be included unless you are willing to give up the house or car 24.
  4. Income and Assets:
    • You must have income or assets to make payments towards your debts 24.
    • The payment terms and amount will be determined through the consumer proposal process and based on your financial situation 24.
    • You must have a stable income to support repayment of your debts within five years 6.
  5. Residency: To qualify for a Consumer Proposal in New Brunswick, you must be a resident of Canada 24.
  6. No Prior Proposal Proceedings: You must not have any prior proposal proceedings, such as a Notice of Intention to file a proposal 2.
  7. Creditor Acceptance:
    • Creditors must vote to accept your consumer proposal 2.
    • A consumer proposal must be approved by the majority of your creditors, in dollar value 25.
    • All creditors are bound by the approved proposal 25.
  8. Ability to Maintain Payments: You must be able to maintain the payments as laid out in your proposal plan 2.
  9. Better Terms than Bankruptcy: A consumer proposal should offer better terms to creditors than if you were to go bankrupt 2.
  10. Undischarged Bankrupt: You can enter into a proposal if you are still an undischarged bankrupt 2.

The first step in starting the process is meeting with a Licensed Insolvency Trustee (LIT) who will complete a financial assessment of your personal situation and help you in making a formal offer to your creditors if a Consumer Proposal is the ideal debt relief option for your unique situation 25.

Selecting the Right Licensed Insolvency Trustee (LIT)

When selecting a Licensed Insolvency Trustee (LIT) for your consumer proposal in New Brunswick, consider the following factors:

  1. Experience and Expertise:
    • Look for an LIT with extensive experience in handling consumer proposals and debt relief solutions 27.
    • Ensure the trustee offers a range of services that cater to your specific needs, such as Consumer Proposals, Declaring Bankruptcy, Debt Consolidation, Credit Counselling, Informal Debt Settlement, and Debt Consolidation services 27.
  2. Accessibility and Convenience:
    • Choose an LIT with offices across New Brunswick, making it easily accessible for you to seek debt relief solutions 27.
    • The directory of active LITs contains the office coordinates of all active LITs, including business offices, resident offices, non-resident offices, by appointment only, or head offices 26.
  3. Reputation and Trustworthiness:
    • Consider the trustee’s reputation and trustworthiness by looking for positive client reviews and a track record of successfully handling similar cases 28.
    • The relationship with your trustee should be a positive one, built on open dialogue and communication 28.
    • Check if the trustee is responsive when you first call and if they get back to you quickly if you have to have someone phone you back 29.
  4. Comprehensive Services:
    • LITs are federally regulated professionals who provide advice and services to individuals and businesses with debt problems, helping people make informed choices to deal with their financial difficulties 26.
    • LITs offer services related to corporate insolvency and consumer insolvency 26.
    • To find a BIA Insolvency Counsellor or view a list of all Licensed Insolvency Trustees, select one of the provided links 26.
    • The full list of LITs includes actively practicing, semi-active, and inactive LITs 26.
  5. Clear Communication and Guidance:
    • Ensure the trustee addresses all your questions and concerns and provides you with all your duties in writing 29.
    • Seeking professional advice from a Licensed Insolvency Trustee will help individuals make an informed decision about consumer proposals and take significant steps towards regaining financial stability 21.

By considering these factors, you can select the right Licensed Insolvency Trustee who will guide you through the consumer proposal process and help you achieve financial freedom.

Consumer Proposal Process in New Brunswick

The Consumer Proposal process in New Brunswick involves several key steps:

  1. Setting up a free, confidential consultation with a Licensed Insolvency Trustee (LIT) to discuss your financial situation, prepare a summary of your debts, assets, income, and expenses, and determine which assets are exempt in the province 5.
  2. The LIT will prepare a report to your creditors explaining the proposal and why they recommend the creditors accept it 5. If a majority of the dollars owed vote in favour of the proposal, it is considered accepted, and all unsecured creditors are bound by it 5.
  3. Once the proposal is accepted, you will:
    • Make all payments agreed upon within the proposal 5
    • Attend two counselling sessions on budgeting, rebuilding your credit rating, and other long-term debt management strategies 5
    • Stop making payments to your unsecured creditors and start making one consumer proposal payment to your LIT instead 31
    • Be protected from collection calls, lawsuits, or wage garnishments by creditors for debts included in your proposal 31
  4. If creditors representing 25% or more of the proven claims file a request within 45 days of the filing of the proposal, a meeting of creditors will be called. The meeting must be held within 21 days after being called, where creditors vote to accept or refuse the proposal 30.
  5. Once you have paid the Consumer Proposal in full and completed the counselling sessions, you will receive your Certificate of Completion and be released from all the unsecured debts you owed on the day you filed 5. Your debts are now discharged, and you are not required to make more payments to your creditors 31. The LIT will make a final distribution of money to your creditors and provide you with a final Statement of Receipts and Disbursements, listing the amounts each creditor received 31.

It’s important to note that the complexity of the process may vary depending on your individual circumstances, as consumer proposals involve various steps, including assessment of debts, assets, income, and expenses, drafting the proposal, and obtaining creditor approval 21.

Key Differences Between Consumer Proposals and Bankruptcy

Consumer proposals and bankruptcy are two distinct debt relief options available to individuals in New Brunswick struggling with overwhelming debt. While both are administered by a Licensed Insolvency Trustee, there are several key differences between the two:

  1. Debt Repayment:
    • Consumer proposals involve a formal agreement between the debtor and their creditors to repay part or all of their debt at a reduced rate over a specific period, with the total unsecured debt not exceeding $250,000 (excluding the mortgage) 32.
    • Bankruptcy is a structured legal process that relieves a debtor of their debts from creditors, with the trustee taking control of the debtor’s assets, investigating their affairs, and monitoring their progress for bankruptcy duties 32.
  2. Payment Structure and Asset Protection:
    • Consumer proposals require regular payments of a fixed amount agreed upon by the debtor and their creditors 32, based on what the debtor can afford 34.
    • Bankruptcy may involve varying monthly payments depending on the debtor’s income, expenses, assets, and household size 32 34.
    • Consumer proposals allow the debtor to keep more of their assets 32, protecting all assets from seizure 35, while bankruptcy requires the surrender of assets or buying them back, with some exemptions 35.
  3. Process and Credit Impact:
    • Consumer proposals have fewer legal procedures, less paperwork, and fewer requirements compared to bankruptcy, which is a more tedious and drawn-out process with extensive paperwork 34.
    • Consumer proposals take five years to complete, with the option to pay off early, resulting in an R9 credit rating during the proposal, improving to R7 upon completion 34.
    • Bankruptcy lasts nine to 21 months for the first time and 24 to 36 months for the second, resulting in an R9 rating that remains on the credit report for six to seven years after discharge 34.

It’s important to note that creditors can reserve the right to reject consumer proposals if they believe it is not a better realization than in a bankruptcy process, preferring to finish the pain now and get nothing rather than hold the account for 5 years to get next to nothing 30.

Life After a Consumer Proposal

Life after a consumer proposal involves rebuilding your credit and financial stability. Here are some key points to keep in mind:

  1. Credit Score Impact:
    • Entering into a consumer proposal will have a negative impact on your credit score, which will remain on your credit report for three years after completing the repayment or six years after filing the proposal 21.
    • You will be assigned a rating of R7, which will stay on your credit report for possibly 3 years after fully completing all payments 30.
    • Your credit score will drop after filing, but this is a temporary hit. If you obtain a credit card while in a consumer proposal and make your payments on time, you should begin to see small improvements in your score even during your proposal 31.
    • A consumer proposal will be completely removed from your credit report 6 years from the date of filing, or 3 years from completion, whichever comes first 31.
  2. Rebuilding Credit:
    • To rebuild credit after a consumer proposal, work with your trustee to ensure everything is reported to the credit bureaus 30.
    • Obtain a secured credit card and take out a small loan to invest in an RRSP, making sure to pay off the balance within 1 year and making monthly payments on time 30.
    • Regularly use secured credit cards, build relations with your financial institution, and try to arrange two credit cards from major chartered banks 36.
    • Pay all your bills on time and pay off your credit card balances every month 36 37.
    • Dispute incorrect information on your credit reports and contact creditors directly if they are reporting incorrect information 36.
    • Reduce the number of credit applications you make, as too many inquiries in a short period may negatively affect your score 36.
    • Mainstream financial institutions generally consider you to have fully re-established your credit once two years have passed since you completed your proposal, and you have established at least two new credit or trade lines with credit limits of $3,000 or higher 22.
  3. Financial Management:
    • After completing a consumer proposal, you will receive a Certificate of Full Performance, indicating that your unsecured debts have been satisfied 36.
    • The Administrator will send you a Statement of Receipts and Disbursements, an accounting of the monies paid and disbursed in the proposal, and a Notice of Taxation of the Administrator’s Accounts and the Discharge of the Administrator 36.
    • During the process of the Consumer Proposal, you successfully balanced your monthly budget. After the proposal is finished, put those monthly proposal payments into a monthly savings plan or RRSP 36.
    • Save money both monthly and when opportunities arise, such as tax refunds, bonuses, commissions, overtime, or a large down payment for financing a car at a reasonable interest rate 36.
    • Open a Tax Free Savings Account (TFSA) and contribute monthly. Any interest or gains are tax-free 36.
    • Focus on your financial health, not just your credit score 37.

Common Challenges and Solutions

While consumer proposals offer a viable debt relief solution, there are some challenges to be aware of:

  • Early repayment is an option, but it requires consultation with the Licensed Insolvency Trustee (LIT) to determine if it’s the right decision for the individual’s specific circumstances 21. Careful consideration should be given to the potential impact on credit and future financial goals before opting for early repayment.
  • Missed payments can have serious consequences. If you miss three months of payments, the proposal will be deemed annulled, and you will be barred from filing another consumer proposal 30. This highlights the importance of maintaining consistent payments throughout the duration of the proposal.

To address these challenges, consider the following solutions:

  1. Work closely with your LIT to develop a realistic budget that accounts for your consumer proposal payments and other financial obligations. Regular communication with your trustee can help you stay on track and address any potential issues before they escalate 21.
  2. Set up automatic payments or reminders to ensure you don’t miss any proposal payments. Consistency is key to successfully completing your consumer proposal and achieving debt relief 30.
  3. If you experience financial difficulties during your consumer proposal, reach out to your LIT immediately. They can help you explore options, such as modifying your payment plan or seeking additional support, to help you stay on course 21 30.


Consumer Proposal Services in New Brunswick provide a viable debt relief option for individuals struggling with overwhelming unsecured debt. By working closely with a Licensed Insolvency Trustee, debtors can negotiate a legally binding agreement with their creditors, reducing their debt repayment obligations and protecting their assets. While the process may present challenges, such as the impact on credit scores and the need for consistent payments, these can be addressed through careful budgeting, open communication with the trustee, and a commitment to rebuilding financial stability.

Ultimately, Consumer Proposal Services offer a path towards a debt-free future for many New Brunswickers. By understanding the benefits, qualification criteria, and key differences between consumer proposals and bankruptcy, individuals can make informed decisions about their debt relief options. With the right support and a dedication to financial management, those who complete a consumer proposal can look forward to a brighter financial future and a fresh start.


What are the disadvantages of entering into a consumer proposal? One of the main drawbacks of a consumer proposal is that it typically takes longer to fulfill than declaring bankruptcy. This is because opting for lower monthly payments extends the repayment period. However, it is possible to pay off a consumer proposal early if your financial situation improves. Additionally, it’s important to note that a consumer proposal will have a negative impact on your credit rating.

Is the Canada Revenue Agency (CRA) willing to accept consumer proposals? Yes, the CRA does accept consumer proposals. Tax debt owed to the CRA is considered unsecured debt and can be included in your consumer proposal. This encompasses all unpaid taxes up to the date you file your proposal, such as income tax debt and GST/HST credit.

Am I allowed to retain a credit card while under a consumer proposal? Unlike bankruptcy, a consumer proposal allows you the flexibility to keep a credit card. This gives you the option to use the card in the future if you choose to do so.

Is there an income limit that disqualifies me from proposing a consumer proposal? No, there is no upper income limit that would disqualify you from making a consumer proposal. The payment amount based on surplus income is calculated only once at the beginning of the proposal and remains the same throughout its duration. Any subsequent changes to your income, whether increases or decreases, do not affect the fixed payment amount agreed upon in your consumer proposal.


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