Consumer Proposal Terms
Around three out of every 1,000 Canadians went ahead with a consumer proposal in 2019.
They decided to take back control of their finances, and a consumer proposal helped them make a fresh start.
As you can imagine, the process of ironing out a consumer proposal that is realistic to both the proposer and their creditors is quite intricate.
Part of the process involves setting out and agreeing to mutually acceptable consumer proposal terms.
Why are terms imposed on consumer proposals?
The reason all consumer proposals have terms stipulated in them is that they are legally binding contracts.
You agree to make smaller, fixed monthly payments in exchange for your creditors wiping away much of your debt.
There must be terms in place to protect both yourself and your creditors in case things go wrong.
The terms also state what can happen if either party doesn’t fulfil their end of the consumer proposal.
What are the basic terms?
As you’ll appreciate, one individual’s financial situation is different from the next.
To that end, consumer proposal terms must reflect the specific financial position of the proposer.
But, some basic terms apply in virtually all circumstances.
The first essential term of a consumer proposal is that, as a proposer, you must agree to pay more money to your creditors than you would if you opted to file for bankruptcy.
After all, your creditors want to receive as much money as possible from you to clear your debts.
The second necessary condition of any consumer proposal is that you agree (and can afford) to make the monthly payments that you propose.
It’s common-sense, and it ensures the avoidance of doubt.
If you have an unrealistic payment plan, it’s just a waste of time.
What other consumer proposal terms are there?
The process of arranging a consumer proposal starts with you working with a licensed trustee.
They will be the third-party that administers your consumer proposal.
It’s with them that you figure out how you can best meet your payments and what you can afford to pay.
Consumer proposal administrators will look at your financial situation in detail.
They’ll make recommendations for the other terms you should include.
Examples may include:
- Offering a one-off “lump sum” payment from savings or an inheritance;
- Using the proceeds of a house sale as a lump sum payment;
- Assigning part of a deceased spouse’s life insurance payout.
How to get started with your consumer proposal
It’s vital that you work with a licensed professional trustee that can guide you through the consumer proposal process.
At Bankruptcy Canada, we have over 430 trustee offices located across Canada.
They’ve helped over 100,000 people since 1999.
If you’d like to discuss how to get started with your consumer proposal, contact Bankruptcy Canada today on (877) 879-4770.
All conversations are strictly confidential, and there’s no risk or obligation.