Any individual that owes less than $250,000, excluding the mortgage on their principal residence, can file a consumer proposal.

A couple, with joint debt, that owes less than $500,000, excluding the mortgage on their principal residence, can file a joint-consumer proposal.

No, filing a consumer proposal does not affect any of your assets. When you file a consumer proposal you retain ownership and control of all assets, including your car and house, and you are free to sell, refinance or otherwise dispose of any property you own during your proposal.

There is no upfront cost or fee to file a consumer proposal, and there are no hidden costs or fees during the term of the proposal. All fees and expenses associated with a consumer proposal are legislated under the Bankruptcy and Insolvency Act and paid out of the total settlement amount.

Almost all unsecured debt can be included in a consumer proposal, including but not limited to:

• Credit card debt.
• Payday loans.
• Canada Revenue Agency debt.
• Bank loans.

There is a very small list of debts that cannot be included in a consumer proposal. These debts are listed in Section 178 of the Bankruptcy and Insolvency Act and include:

• Traffic fines.
• Court awarded damages related to bodily harm, assault or wrongful death.
• Spousal support.
• Child support.
• Any debt incurred as the result of fraud.
• Government student loan debts (if you have haven’t been out of school for more than 7 years).

Creditors accept consumer proposals because they are good business decisions that provide a higher recovery than bankruptcy. Obviously, creditors want to collect all of the money owed to them. However, when creditors receive a consumer proposal they realize that that isn’t going to happen. They know that if they are unwilling to accept a reasonable settlement (consumer proposal) there is a high probability that you may file bankruptcy, which would result in a lower recovery. Therefore, it is the threat of bankruptcy, and the risk of a potential lower recovery, that causes creditors to accept consumer proposals.

Step 1: Meet with a licensed insolvency trustee:

• Review your situation and discuss options.
• Confirm that filing a consumer proposal is the right option for you.
• Determine the appropriate proposal terms based on your individual situation and budget.

Step 2: File your consumer proposal:

• Complete and sign proposal documents with the trustee.
• Register your proposal with the Office of the Superintendent of Bankruptcy.
• Send notice of your proposal to your creditors.

Step 3: Get your proposal approved:

• Creditors have 45 days from the date of filing to vote on your proposal.
• If the majority (51%) of creditors by dollar value ($1 = 1 vote) vote in favour of the proposal it is approved as filed.
• If creditors do not vote within the 45-day voting period, they are deemed to have accepted the proposal and the proposal is approved as filed.
• If the majority (51%) of creditors by dollar value ($1 = 1 vote) vote against your proposal it does not mean that your proposal is rejected. It simply means that we need to negotiate with the creditors further, and, when necessary, amend the terms of the proposal to reach a mutually acceptable settlement.
• Deemed Court approval occurs 15 days after creditor approval has been obtained.

Step 4: Complete your consumer proposal:

• Make all required payments.
• When completed, a “Certificate of Full Performance” is issued by the trustee.
• Completion of the proposal discharges you of any future obligation to the creditors that were included in your proposal.

Once your proposal is accepted by creditors and approved by the court you must:

• Make agreed-upon payments to the trustee
• Attend two credit counseling sessions
• File your income taxes on time
• Pay any income taxes owed in the post-proposal period

Consumer proposals can vary in length. They can be setup as single payment (lump-sum) proposals or can span a period of up to 5 years (60 months). Regardless of how the proposal is initially setup, all consumer proposals are open and can be paid-off at any time.

Consumer proposals result in an R7 credit rating which stays on your credit report for three years after you complete your consumer proposal.