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How Do Consumer Proposals Work?

Consumer Proposals are the number one alternative to personal bankruptcy in Canada. A Consumer Proposal 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 amount.

Click below to watch our video for a 1-minute overview of Consumer Proposals:

Consumer Proposals allow you to make a legal arrangement, or debt settlement, with your creditors to have you pay only a portion of your debts to settle them in full.

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 provides a means to paying off debt and can be a successful debt management option for you without resorting to personal bankruptcy.

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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.

Debt Settlement

Consumer Proposals are sometimes referred to as “Debt Settlement Proposals” – it’s important to know that a debt settlement offer that is legally binding on your creditors and provides you with the full transparent advantages of a Consumer Proposal can only be filed by a Licensed Insolvency Trustee (formerly known as a Trustee in Bankruptcy). Filing a Consumer Proposal has significant advantages compared to traditional debt consolidation or credit counselling programs.

A Consumer Proposal can be made by a person who owes between $1,000 and $250,000 of debt, not inclusive of 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.

Virtually all types of debts can be extinguished using a Consumer Proposal, including debt for government monies owed to Canada Revenue Agency and student loans.

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.

Cut your debt by up to 80%, with no added interest or fees by filing a Consumer Proposal.

Some real-life examples of successful Consumer Proposal scenarios:

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 Proposal questions? Contact Us to learn more.

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

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  1. Meet with a Sands & Associates representative for a free 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.

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

    Creditors have 45 days to consider your Consumer Proposal. 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.

    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.

    Consumer Proposals are almost always accepted by creditors as they will provide a better return than if you opted to declare a personal bankruptcy.

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

    Make your regular (usually monthly) payments to the Licensed Insolvency Trustee, for distribution to your creditors. You may pay off your Consumer Proposal in full at any time, without penalty.

    Attend two financial counselling sessions focused on credit improvement and debt management.

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

    After your last payment, the Trustee will make a final distribution to your creditors and issue you a Certificate of Full Performance.

    You are now debt-free and have achieved a financial fresh start!

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