Can You File a Second Consumer Proposal?

A consumer proposal is an option that allows people with excessive debt to reorganize their debts in a structured way. Filing a second consumer proposal is no more complicated than the first and does not involve extra costs. Learn when a second proposal is possible, how it works, and which debt solutions can help you manage your finances more effectively.

What Is a Second Consumer Proposal?

A consumer proposal is a legal agreement between a debtor and their creditors to repay their debts. A second proposal occurs when a first proposal has already been accepted or completed and the debtor is once again facing financial difficulties.

Difference Between First and Second Proposals

The process for submitting a first or second consumer proposal is the same. The procedure and its impact on your credit report do not change. However, a new proposal cannot be submitted while the first one is still pending. Other important conditions should also be considered:

1. Debts covered by the first proposal cannot be included again
2. It is not possible to add new debts to a proposal that is already in progress: the current proposal must first be amended or withdrawn before it is accepted by the court

When Should a Second Proposal Be Considered?

A second consumer proposal can be considered when:

• The first proposal has been cancelled, for example, after missing three payments
• The goal is to reorganize existing debts without filing for bankruptcy

If a proposal is cancelled, you have three options:

1. Reactivate the cancelled proposal
2. File for personal bankruptcy
3. Apply to the court for permission to file a new proposal

To reactivate a cancelled proposal, you must provide proof that you can repay the three missed payments, usually within 30 days of the cancellation notice.

You can file as many consumer proposals as needed during your lifetime, but it is important to understand that each step has a significant financial impact. The best approach is to manage your debts proactively to avoid future financial difficulties. Keep in mind that some financial effects, such as your ability to obtain a mortgage, may last several years after completing a proposal.

How Do I File a New Application?

The process for submitting a consumer proposal is always the same. You must work with a Licensed Insolvency Trustee (also called a bankruptcy trustee) follows bankruptcy law, which governs all procedures related to bankruptcy and insolvency. They review your financial situation, assess your debts and assets, then prepare a repayment proposal and submit it to your creditors, who can either accept it or request changes. Once the creditors accept the proposal, it must be followed according to the agreed terms.

Advantages and Disadvantages

If you are facing financial difficulties, filing a consumer proposal can offer several advantages. It allows you to restructure your existing debts, including unsecured debts, and protects you from legal action or seizure by creditors.

However, there are important drawbacks to consider. A consumer proposal affects your credit file and credit rating, and it is crucial to make all monthly payments on time. The best approach is to manage your debts proactively to avoid falling into excessive debt again.

A Licensed Insolvency Trustee can help you find the right solution to ease your financial burden and provide debt relief options tailored to your situation. All procedures are overseen by the Office of the Superintendent of Bankruptcy, ensuring your rights and obligations are respected.

How to Avoid Having to Resort to a Second Proposal?

Although a second consumer proposal is a legal way to restructure your debts, it is always better to prevent debt problems before they arise. Here are some best practices to help you avoid needing a second proposal:

• Manage your credit cards carefully

Poor credit card management can quickly lead to debt accumulation and make your financial situation worse. It is essential to use credit responsibly, track your spending, and pay off balances on time to prevent financial difficulties and avoid the need to file a consumer proposal in the future.

• Track your spending and set a budget

Regularly tracking your income and expenses allows you to quickly identify excessive spending and adjust your habits before debt becomes a problem.

• Prioritize debt repayment

Focusing on paying off high-interest debts, such as credit cards, can help reduce the total cost of your debt and lower the risk of needing to file another consumer proposal.

• Consult a personal finance expert

A financial advisor or licensed insolvency trustee can help you create a realistic financial plan and recommend tailored solutions to manage your debts proactively.

By following these best practices, you can avoid accumulating debt, reduce the risk of needing a second consumer proposal, and eventually become debt free, improving your long-term financial health.