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Financial difficulties can arise at any time. For most people, the decision between filing bankruptcy or a Consumer Proposal is a serious and confusing one. We recognize the need to understand the Consumer Proposal process and its associated risks. We will be there every step of the way to assist you.

The Bankruptcy and Insolvency Act deals with Consumer Proposals which are intended to help reduce the number of bankruptcy filings by allowing the debtor who owes less than $250,000 (excluding mortgages on their principal residences) to negotiate with their creditors for the reduction of their debt and for an extension of the time for payments of their debts.

A Consumer Proposal is a legal process that provides a debtor or a bankrupt with an opportunity to modify his/her payments to creditors by extending the time for payment or reducing the amount to be paid, usually over some time.

The purpose of a Consumer Proposal is to allow a debtor or a bankrupt to make a settlement with his/her creditors while avoiding bankruptcy. Executions, garnishees, and other actions by creditors will be stopped once the Consumer Proposal is filed.

To qualify to make a Consumer Proposal, a debtor must owe between $1,000 and $250,000, and there are other provisions of the Act to deal with these debts.
An individual who has filed an assignment in bankruptcy may make a Consumer Proposal if the Inspectors, if any, have given their approval.

The first step in the process is to contact a licensed trusted professional who will inform you of a consumer proposal’s effects and prepare the necessary documents to have a Proposal filed.

The creditors vote on a Consumer Proposal, and it is not always accepted.
If the creditors reject the Consumer Proposal, the debtor will no longer be protected by the Act. The creditors will again be able to take steps to recover their debts. At that time, the debtor may wish to consider other available solutions.
Once the Consumer Proposal is accepted, the debtor will make the payments to the Trustee, as provided for in the Consumer Proposal. This may involve a one-time lump sum payment or monthly payments for a period of no more than five years or a combination of both.

The debtor is required to advise the Trustee of any changes in his/her circumstances that could jeopardize his/her ability to make the payments required under the Consumer Proposal. However, this will not change the amounts to be paid as agreed to in the Consumer Proposal.

A Consumer Proposal can be made for any period up to a maximum of five years.

Generally, a lawyer is not required. However, if the debtor feels the need for legal advice, he/she may retain a lawyer. Consumer Proposals only cover debts that are secured.

Consumer Proposals will not cancel the liability of anyone who has guaranteed or co-signed any loans. These guarantors will still be responsible for the debts less any payments the creditor receives from the Consumer Proposal.

Contact us now to see if you qualify!


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