What are the Steps of a Consumer Proposal?

Debt consolidation is a common challenge faced by individuals worldwide. One effective strategy to tackle this issue is by filing a Consumer Proposal. If you’ve been asking yourself, “What are the steps of a consumer proposal?”, you’ve come to the right place. This comprehensive guide will provide you with every detail you need to understand the process of filing a consumer proposal.

Overview of a Consumer Proposal

A Consumer Proposal is a legal tool for debt management, offering individuals an opportunity to consolidate and reduce their debts. It’s an alternative to traditional debt consolidation and is especially beneficial for those who can afford to make some payments but not the full amount.

Benefits of a Consumer Proposal

A consumer proposal offers multiple advantages:

  • Debt Reduction: Most individuals can reduce their total debt by 20-50% via a Consumer Proposal.
  • Consolidation: It enables individuals to consolidate all their debts into one interest-free payment.
  • Legal Protection: Once a Consumer Proposal has been filed, it provides legal protection against debt collectors.

Now, let’s delve into the main steps involved in filing a Consumer Proposal.

Step 1: Consultation with a Licensed Insolvency Trustee

The first step in filing a Consumer Proposal involves scheduling a meeting with a Licensed Insolvency Trustee (LIT). This trustee will assess your financial situation and provide guidance on the most suitable debt resolution options. It’s crucial to ensure that your trustee is government-licensed.

Note: There are numerous companies offering services similar to a Consumer Proposal. However, these often lack the same protection and come with high upfront fees. Always ensure that you’re working with a government-Licensed Insolvency Trustee.

Step 2: Filing the Consumer Proposal

After your consultation with the LIT, the next step is to file the Consumer Proposal. The trustee will assist you in preparing the official Consumer Proposal documents that outline your payment plan. The documents will then be sent to your creditors for their consideration. The creditors have 45 days to accept or reject your proposal.

Step 3: Acceptance of the Consumer Proposal

If the proposal is accepted by more than 50% of your creditors (by dollar value), it becomes legally binding on all creditors, even those who did not agree. Once your Consumer Proposal is filed, interest on your debt is frozen, and all collection actions against you must cease immediately.

Step 4: Execution of the Consumer Proposal

After the acceptance of your Consumer Proposal, you begin working on its terms, which usually involve making monthly payments to the LIT for distribution to your creditors. During this period, you’ll also attend two financial counselling sessions focusing on credit rebuilding and good financial management.

Step 5: Completion and Certificate of Full Performance

Upon completion of all terms of your Consumer Proposal, you’ll receive an official Certificate of Full Performance, marking the end of your Consumer Proposal and making you debt-free.

Payment Example of a Consumer Proposal

To better understand the process, let’s consider an example. An individual with a total debt of $42,360, unable to make the minimum monthly payment of $1,200, may file a Consumer Proposal to reduce their debt by 55%—bringing it down to $18,600. The new monthly payment becomes $310, and they will be debt-free in five years.

After Filing the Consumer Proposal

After the Consumer Proposal is filed, the LIT coordinates all communications with your creditors. Your creditors must stop contacting you for payment, stop charging interest or other fees, and cease any legal actions (including wage garnishments or account freezes).

Duration of a Consumer Proposal

The duration of a Consumer Proposal varies based on the payment terms offered. Although most people offer monthly payments, ranging from one month to up to sixty months, others may propose lump-sum payments or proceeds from the sale of an unwanted asset.


Filing a Consumer Proposal can be a great way to consolidate and reduce your debts, thereby offering a viable alternative to traditional debt consolidation. It’s always a good idea to consult with a Licensed Insolvency Trustee to discuss your options and devise a plan that is tailored to your unique financial situation. So, if you’re thinking, “What are the steps of a consumer proposal?”, now you know the answer. Take the first step towards a debt-free future today!

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