Consumer Proposals: What to Expect

What to Expect From a Consumer Proposal

Debt is an issue that can affect almost anyone.

People go into debt for different reasons, so it’s understandable that everyone’s process of getting out of it can be a different story.

While many people chose to claim bankruptcy to wipe their debts, there are a number of other solutions to help you deal with a serious amount of debt.

Depending on your circumstances, bankruptcy may be the only option left, but there are alternatives that could better fit your situation.

One such alternative is a consumer proposal.

What is a consumer proposal?

A consumer proposal is described as a legally-binding debt settlement agreement.

It’s filed with a Licensed Insolvency Trustee and you’re expected to pay back a percentage of what you owe to receive full debt forgiveness.

In many cases, you can receive a settlement of 30 cents on the dollar.

This means a debt of $40,000 can be reduced to just $12,000.

The repayments can also be interest-free and take place over five years.

In this same scenario, that means a debt of $40,000 can be reduced to five years of monthly payments at just $200.

While a consumer proposal isn’t as comprehensive as claiming bankruptcy, it can still help you get rid of a considerable amount of debt.

In most cases, it can eliminate almost all unsecured debts such as:

• Bank loans.
• Payday loans.
• Credit card debts.
• Tax debts.
• Certain student loan debts.

What can I expect from a consumer proposal?

Consumer proposals require a full financial evaluation.

In order for it to be effective, you’ll need to speak with a trustee to determine how much you can afford to repay.

This will be a full calculation of your income, assets and also liabilities.

You’ll be required to procure many of these documents to help speed up the process.

With a consumer proposal, you won’t be directly negotiating with creditors.

Instead, a trustee will speak with creditors on your behalf to ensure you get the largest debt reduction possible.

They will then present a consumer proposal to your creditors who will then have 45 days to accept or reject the proposal.

Thankfully, most consumer proposals are accepted.

In the event that it’s reflected, it can be revised and resubmitted.

Alternatively, you can pick a different method to eliminate your debt.

Once your consumer proposal has been finalized, amendments are difficult to make and you’ll be expected to make prompt payments from then on.

If you adhere to the repayment plan, it can be a relatively straightforward and inexpensive way to get out of debt.

Since it’s a long-term plan that can last five years, you’ll need to discuss potential changes in your financial circumstances with your trustee.

If you’d like to learn more about eliminating debt, don’t hesitate to contact us today for more information about bankruptcies, consumer proposals and more.

Information on Consumer Proposals

Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
Consumer Proposal Eligibility
How to Amend a Consumer Proposal