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What is a Consumer Proposal?

A Consumer Proposal is a unique debt solution that allows you to settle your debts for less than you owe by making a “deal” with your creditors and consolidating your debts into one manageable monthly payment. A Consumer Proposal provides a means to reducing and paying off debt and can be a successful debt management option for you – without resorting to personal bankruptcy. Consumer Proposals are the number one alternative to personal bankruptcy in Canada!

By filing a Consumer Proposal, you are making a legal arrangement (or debt settlement) with your creditors where you only have to pay a portion of your debts to settle them in full, without borrowing or interest charges. This powerful tool has steadily gained in popularity in recent years and because Consumer Proposals provide automatic protection from your creditors and a freeze on any additional interest, they have many benefits compared to other debt consolidation options.

A Consumer Proposal can be made by a person who owes between $1,000 and $250,000 of debt (not including mortgages on a personal residence). If the person’s debts are more than $250,000, they may still be able to file a Proposal, but some different rules will apply.

Watch Sands & Associates’ 1-minute overview of Consumer Proposals:

Cut your debt by up to 75%, with no added interest or fees by filing a Consumer Proposal.

How Do Consumer Proposals Work?

Consumer Proposals allow you to consolidate and pay off virtually all types of debt, including but not limited to: general consumer debts like credit cards, overdrafts, payday loans or lines of credit, and government debts like student loans and Canada Revenue Agency tax debts. Working with a Licensed Insolvency Trustee you will offer to repay only the portion of the total debt (including accumulated interest) that you can afford to repay, with the unpaid balance being forgiven (written-off) by your creditors.

The amount of time you have to complete your Consumer Proposal consolidation payments depends on your situation – it could be just a single lump-sum payment, or as long as 5 years – your proposal is tailored to your needs.

What happens after I file a Consumer Proposal?

Your creditors will be prohibited from charging you further interest or from contacting you for future payments – your Licensed Insolvency Trustee will essentially step into your shoes and act as your representative in corresponding with your creditors and facilitating your Consumer Proposal. Instead of making individual payments to each of your creditors to service each debt, you will simply make a single proposal payment (usually monthly) to your Licensed Insolvency Trustee. Your Consumer Proposal payment covers everything; from settling the debt to the services your Licensed Insolvency Trustee provides throughout the proposal’s duration, there are no added fees or hidden charges to be paid by you.

A Licensed Insolvency Trustee will help you assess whether a Consumer Proposal could be your best option to consolidate your debts – book your confidential free debt consultation here.

Do I Need a Loan to Make a Consumer Proposal?

Because a Consumer Proposal is a legal debt management tool, no loan or borrowing is needed to make a Consumer Proposal, and your credit history is not a factor. A Licensed Insolvency Trustee can offer debt management services regardless of your credit score and history, whether positive or negative.

Is Debt Settlement the same as a Consumer Proposal?

Consumer Proposals are sometimes referred to as “Debt Settlement Proposals” but it’s important to know that a debt settlement offer that is legally binding on your creditors and provides you with the full advantages of a Consumer Proposal can only be filed by a Licensed Insolvency Trustee (formerly known as a Trustee in Bankruptcy).

Licensed Insolvency Trustees are the only debt help professional authorized and endorsed by the Federal and Provincial governments to help consumers manage their debts. Working with a Licensed Insolvency Trustee ensures you are receiving debt help from a fully qualified reputable professional and getting the benefits and protection of your consumer rights and transparency throughout the process.

Is Debt Consolidation the same as a Consumer Proposal?

Although they may sound similar, filing a Consumer Proposal has significant distinct advantages compared to traditional debt consolidation, credit counselling programs or debt settlement services.

Some of the advantages of filing a Consumer Proposal include:

  • Consolidating your debt without borrowing.
  • Saving you money and reducing your monthly debt payments.
  • Giving you breathing room from your debts and creditors.
  • Having a clear “debt-free” date (although you can pay off your Consumer Proposal early at any time without penalty).

To find out if a Consumer Proposal is a debt settlement option that makes sense for you, meet with a Licensed Insolvency Trustee for a free confidential debt consultation.

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Looking for something specific? Check our FAQs sections for commonly asked questions about Consumer Proposals, Personal Bankruptcy, and Debt Help in BC.

Filing a Consumer Proposal in BC: Step-by-Step

1. Meet with a local Sands & Associates representative for a free debt consultation.

We’ll meet with you confidentially one-on-one to understand and assess your financial situation and discuss all the options available to resolve your debts. Together, we will determine a payment plan that works for you over the term of the proposal. Your income, family size and other relevant considerations will be taken into account to ensure your Consumer Proposal is affordable and set up for success from the start.

2. We file your Consumer Proposal and administer the voting process.

Your creditors have 45 days to consider your Consumer Proposal, although you will get relief from making further payments or collection action right away. Once your Consumer Proposal is filed, this will act as a ‘shield’ between you and your creditors. Interest will automatically be frozen and attempts to collect payment from you will cease immediately – this includes bank account freezes and even wage garnishments that creditors such as the Canada Revenue Agency may have put in place.

If the majority of your creditors (by dollar value) vote to accept the proposal, your Consumer Proposal is accepted and is legally binding on all parties – even creditors who may not have voted to accept your proposal. Consumer Proposals have a very high success rate and are almost always accepted by creditors, as they will provide a better return than if you opted to declare personal bankruptcy instead.

Learn More about What Happens After Filing a Consumer Proposal.

3. You fulfill the terms of your Consumer Proposal, as accepted by your creditors.

Make your regular (usually monthly) payments to your Licensed Insolvency Trustee, for distribution to your creditors. You may pay off your Consumer Proposal in full at any time, without penalty. Attend two private financial counselling sessions focused on credit improvement tips, budgeting and spending habits, money and debt management strategies.

4. Your Consumer Proposal is complete, achieving full and final settlement of your debts.

After your last payment is made, your Licensed Insolvency Trustee will make a final distribution of funds to your creditors and issue you a Certificate of Full Performance. The unpaid balance of the debts included in your Consumer Proposal will be forgiven by your creditors. You are now debt-free and have achieved a financial fresh start!

Learn how the Consumer Proposal process can help you become debt-free for good. Book your free confidential debt consultation today.

Consumer Proposal Examples

Below are some real-life examples of successful Consumer Proposals that Sands & Associates has filed for just a few of the more than 50 thousand BC consumers we have helped over the years, to give you an idea as to how much debt a Consumer Proposal may write-off, and how a Consumer Proposal can be tailored to meet your needs and unique situation:

1. A person with debts of over $41,000 structured a Consumer Proposal whereby all debts will be settled in full via total monthly payments of $350 for a period of 60 months. Debts cut by close to 50%!

2. Another individual successfully consolidated their debts of approximately $55,000 using a Consumer Proposal, with monthly payments of $650 over a 36-month term. Debts cut by nearly 60%!

3. Yet another person used a Consumer Proposal to reduce their $9,000 debt down to a total monthly payment of $200, paid over 24 months. Debts cut by almost 55%!

4. A self-employed individual with total debts owing of $43,000 (including tax debt) filed a Consumer Proposal to consolidate their debt repayment down to a total monthly payment of $230 for 60 months. Debts cut by nearly 70%!

Consumer Proposals are deliberately calculated to take each person’s unique set of circumstances into consideration, allowing you to achieve the best possible outcome and make becoming debt-free an achievable goal. We’re here to help you get a financial fresh start!

Do you have more questions about Consumer Proposals? Contact Sands & Associates today to learn more, or to book your free debt consultation in a local BC office near you.