Consumer Proposal

If you are struggling to pay your debt, and want to avoid bankruptcy, it may be possible to file a consumer proposal to settle your debt at a lower amount.

What is a consumer proposal?

  • A consumer proposal is a legal process that is administered through a Licensed Insolvency Trustee.
  • The consumer proposal is essentially a contract between you and your creditors that is binding on all creditors, including government and student loans.
  • The consumer proposal is an offer to your creditors to pay them a percentage of what they are owed.
  • The payment terms can include a deferral of payment for a period of time, a lump sum or monthly payments or any combination of these.

What are the benefits of filing a consumer proposal?

  • You avoid bankruptcy.
  • You get to keep your assets unless you have elected to include them in your consumer proposal.
  • You pay only a portion of your total debts.
  • Most creditors are stayed from taking any action to collect their accounts. This means garnishees are stopped and you no longer have to deal with collection calls from your creditors.
  • Your payments are set and will not change if your income increases or if you receive a windfall from a lottery winning or inheritance during your consumer proposal.
  • You can pay off your consumer proposal at any time.
  • The negative impact on your credit bureau is generally less than a bankruptcy and you can work on improving your credit score while in your consumer proposal.

What are the basic requirements of a consumer proposal?

  • Your total debt is less than $250,000, excluding a mortgage on your personal residence. There is another proposal option if your debt is above this limit.
  • The amount you pay is based on your income and the assets you own. As a rule of thumb, your consumer proposal should provide your creditors with more than they would receive in a bankruptcy.
  • The period of your consumer proposal is restricted to a maximum of 5 years.
  • The majority of creditors must accept your consumer proposal but they must vote within 45 days.
  • A consumer proposal must be filed with a Licensed Insolvency Trustee.

How do I obtain more information?

  • Take the first step and contact D. Kwasnicky & Associates Inc. for a free personal financial assessment to determine if you qualify. We will discuss the pros and cons of the various options that can help you solve your financial problems.
  • There is no commitment. You can walk away with the comfort of knowing you have obtained financial advice and made a decision that is right for you.
  • You can also check out the free information available to individuals on Consumer Proposals on the Office of the Superintendent of Bankruptcy website at https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br02051.html.