Consumer Proposals can be a great option for individuals who want to consolidate and reduce their debts. If you have some ability to make payments on your debts, but you are unable to repay the full amount then a Consumer Proposal can be an affordable alternative to traditional debt consolidation.
The four main steps to filing a Consumer Proposal in BC are outlined here:
- Meet with a Licensed Insolvency Trustee to assess your situation and review all the options available to resolve your debts.
Consumer Proposals are tailored to each person’s unique situation; your Sands & Associates Trustee will help you work out a Consumer Proposal payment plan that is suitable for your income, family size, and other relevant factors such as the amount of debt you are carrying.
Use our Debt Options Calculator to get a general comparison of four key debt options.
There are many companies who have “programs” which may sound very similar to a Consumer Proposal – unfortunately they do not offer the same protection as a Consumer Proposal and they often come with high up-front fees. Be sure that you are meeting with a government-Licensed Insolvency Trustee when it comes to Consumer Proposals.
- When you’re ready to file your Consumer Proposal, you’ll meet with your Licensed Insolvency Trustee to sign the official Consumer Proposal documents. Once complete, these will be officially registered and sent to your creditors, so they can consider your proposal.
Your creditors have 45 days to consider your Consumer Proposal. If more than 50% of your creditors (by dollar value) vote to accept your proposal, then the Consumer Proposal will be legally binding on all the creditors, even if some have not agreed.
Consumer Proposals are nearly always accepted by creditors, as they will provide a better return on the debt than if you decided to file a personal bankruptcy. They also give all parties a clear start and end date.
When your Consumer Proposal is filed, this is when interest becomes frozen, and collection action against you must stop immediately. Your creditors are no longer permitted to seek payment from you or to continue further collection activity – this includes creditors such as Canada Revenue Agency and Student Loans.
- Complete the terms of your Consumer Proposal. Once your Consumer Proposal has been accepted, you’ll begin working to complete the terms offered; this is usually by making monthly payments to the Licensed Insolvency Trustee, for distribution to your creditors.
You’ll also have two financial counselling sessions, which will focus on credit rebuilding and good financial management. The sessions are private one-on-one meetings held at the Trustee’s office.
You can pay off your Consumer Proposal early or make extra payments towards the settlement amount at any time with no penalty.
- When your Consumer Proposal terms are complete (ie. the last payment is made) you’ll receive an official Certificate of Full Performance. You are now debt-free and have achieved a financial fresh start!
The main goal of a Consumer Proposal is to settle the amounts owed to your creditors without over-burdening you with unmanageable payments and interest and allowing you to avoid filing for bankruptcy. Consumer Proposal terms can and do vary greatly depending on a person’s unique set of needs and circumstances. The best way to find out if a Consumer Proposal will work for you is to meet with a Licensed Insolvency Trustee.