Consumer proposals, the alternative to bankruptcy
Financial difficulties can be stressful, but it is possible to restore your financial health with professional help. Whether you’re struggling with credit card debt, a line of credit or some other form of debt, there are solutions. One possible solution is a consumer proposal.
A consumer proposal is one of the best ways for an over indebted person to avoid declaring bankruptcy. With the help of a trustee, a consumer proposal allows you to negotiate with creditors to partially repay your debts.
What is a Consumer Proposal?
A consumer proposal is a legal and regulated process in Canada that must be supervised by a licensed insolvency trustee. The consumer proposal involves partially reimbursing your creditors by consolidating your debts. The goal is to avoid starting a personnal bankruptcy process and help consumers get out of financial difficulty.
Anyone with a debt of less than $250,000, excluding the mortgage on their home, may consider a consumer proposal. A consumer proposal can also be filed by two spouses who have mostly the same debts.
The 6 Steps of a Consumer Proposal
1- Make an appointment with one of our advisors
The first step towards financial health is to make an appointment with one of our debt consultants. The initial consultation is confidential, free and without obligation. The purpose of this meeting is to evaluate your financial situation and consider your options. You can contact us at 1-877-352-6661 or by filling out our form to book an appointment.
2- First meeting
At your first meeting, one of our advisors will assess your financial situation. The advisor will evaluate possible solutions. If a consumer proposal is considered, a payment amount based on your budget is established.
Once the proposal has been accepted by the creditors, this amount will be payable monthly. Repayment terms can range from a few months to a maximum of 60 months (5 years). And that’s it, the process is underway.
You are now under the protection of the Bankruptcy and Insolvency Act (BIA). If applicable, all collection actions by your creditors are suspended. When you are under BIA protection, no legal proceedings can be instituted or continued against you. This includes bank seizures and wage garnishments.
3- Notice to creditors and acceptance of proposal
Once the documents have been filed with the Office of the Superintendent of Bankruptcy (OSB), the trustee notifies your creditors. Creditors have then 45 days to approve or request a meeting of creditors to discuss the consumer proposal. However, a meeting of creditors is held only when 25% of creditors request it. Otherwise, the proposal is deemed accepted.
4- Meeting of creditors, if applicable
At this meeting, the IAS will negotiate with your creditors to reach a mutually acceptable agreement. If the majority of creditors agree with the modified proposal, it will be accepted.
If, for one reason or another, the consumer proposal is rejected, other solutions are available to you. However, a refusal of your consumer proposal by your creditors does not automatically mean you need to file for bankruptcy. Your advisor will be able to advise you on the solutions available to you.
5- Counselling sessions
Once your consumer proposal has been approved by your creditors, you will be required to pay the scheduled monthly payments. You will also be required to attend two mandatory counselling sessions. These sessions are designed to help you maintain good financial health.
6- Certificate of completion
Once all the conditions of the consumer proposal have been met, you will receive a certificate of completion. This confirms that the proposal is complete and that you have been released from the file.
Strengths of the consumer proposal :
- Stay of proceeding of all recourse by your creditors;
- No impact on your assets (you can keep all your possessions);
- Partial repayment of your debts, interest-free;
- Only one payment per month to the authorized insolvency trustee (IAS).
- Reduced impact on your credit score file. The note on your credit rating file is erased 3 years after full execution of your consumer proposal.
File a Consumer Proposal
Roy & Associés can help you with a consumer proposal. At M. Roy & Associates, we treat our customers with dignity by recommending debt relief solutions tailored to their situation.
We can help you find a solution to debt. Contact us today at our toll-free number 1-877-352-6661 or online by filling out the form for a free, confidential consultation.
