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. Among those possible solutions 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 (LIT). The consumer proposal involves partially reimbursing your creditors by consolidating your debts. The goal is to avoid starting a personal 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 schedule 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 and evaluate possible solutions. If a consumer proposal is considered, a payment amount based on your budget will be 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 both bank and wage seizures.

3- Notice to creditors and acceptance of proposal

Once the documents have been filed with the Office of the Superintendent of Bankruptcy, the trustee notifies your creditors. Creditors have 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

During this meeting, the LIT 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. The rejection of your consumer proposal by your creditors does not mean you need to file for bankruptcy. Your trustee will be able to advise you on the solutions available to you.

5- Counseling sessions

Once your consumer proposal has been approved by your creditors, you will be required to make the agreed monthly payments. You will also be required to attend two mandatory counseling sessions. These sessions are designed to help you maintain good financial health in the future.

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 of your obligations.

Strengths of the consumer proposal :

  • Stay 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 licensed insolvency trustee (LIT).
  • Reduced impact on your credit score file. The note on your credit file is erased 3 years after the full execution of your consumer proposal.

File a Consumer Proposal

M. Roy & Associés can help you with a consumer proposal. At M. Roy & Associés, we treat our customers with dignity by recommending debt relief solutions tailored to their personal financial situation.

We can help you find a solution. Contact us today at our toll-free number 1-877-352-6661 or online by filling out the form for a free, confidential consultation.


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