A consumer proposal is a formal arrangement between you and your creditors.
Should you file a proposal to your creditors? If you have consistent income and are able to make monthly payments to your creditors, but are unable to pay the amount your creditors are requesting, this may be a good option.
A proposal is administered by a licensed trustee in bankruptcy. Unlike the Debt Management Plans offered by Credit Counsellors, a consumer proposal is covered by the Bankruptcy and Insolvency Act. This legislation provides you with protection from your creditors and forces them to participate in the process. Also, you are provided with the ability to compromise the total amount you owe (i.e. payback less than the total amount owed). When you file, you’re protected from your creditors as they can take no further legal or collection action against you, and they must stop all interest charges.
Filing a consumer proposal can be a better option to deal with money problems as opposed to personal bankruptcy.