A consumer proposal is a legal process that helps you pay back your creditors, the companies and people you owe money to. It is an agreement between you and all your creditors that you will pay less than the full amount you owe or extend the payment period. It is an alternative to bankruptcy.

Because it is a legal process, a professional called a Licensed Insolvency Trustee helps you with the process.

Here are some more details:

• Deal with debt – You can offer your creditors less than the amount you owe on the unsecured debts. A Licensed Insolvency Trustee will guide you on this. (Unsecured debt means there isn’t a physical item the debt is connected with, like a house or a car. Unsecured debt can be credit cards, payday loans, or unsecured lines of credit.)
• Interest-free – Interest stops accumulating immediately on the unsecured debts when you file the consumer proposal. (Interest will continue on any secured debts you have.)
• Keep assets – Unlike a bankruptcy, you usually keep your assets (house, car). 
• Single payment – It consolidates debts into one affordable monthly payment. A single payment that stays the same every month is easier to plan for and pay.
• Set time period – The repayment period is usually 4-5 years and doesn’t go more than 5 years. You can shorten this period by making higher payments or additional payments.
• Stops creditor actions – Immediately stops collection calls and legal actions.
• Regulated – The process is regulated by the government, so there are guidelines and rules to guide you through the process.

What is it like to do a consumer proposal?

1. Meet with a Licensed Insolvency Trustee – A Licensed Insolvency Trustee looks over your income and assets to create a fair, affordable proposal with you. 
2. File the proposal – The Licensed Insolvency Trustee files the documents with the Office of the Superintendent of Bankruptcy.
3. Creditor approval – Creditors have 45 days to accept or reject the proposal. If a majority (by dollar value) accepts, it is binding on all creditors. If a creditor doesn’t respond by 45 days, the consumer proposal is deemed accepted. (There are a few instances in which the approval/rejection of the proposal may take longer.)
4. Repayment – You make payments to the Licensed Insolvency Trustee, who distributes them to creditors. 
5. Credit Counselling – You meet with the Licensed Insolvency Trustee twice over the repayment period to do credit counselling sessions.
6. You get a certificate – After you are done making all your payments and you have done the credit counselling, you are released from the consumer proposal and given a “Certificate of Full Performance”. Your legal responsibility for those debts is over. 
7. Credit report – On your credit report, it will show you are doing a consumer proposal. This will stay on your credit report for 3 years after the proposal is completed. It will significantly impact your credit score. 

I wanted to get a better understanding of a consumer proposal and asked a Licensed Insolvency Trustee:

“A consumer proposal is an excellent option for individuals to consider when dealing with their debt problems. It provides for relief from the interest on the unsecured debts, collection calls, and legal actions.  The flexibility in a proposed payment schedule and the ability to retain assets that might otherwise be seized in a bankruptcy is another added benefit.  Individuals do have a strong desire to ensure creditors receive funds for what is owed, and creditors’ recoveries are often greatly improved compared to bankruptcy. Reaching out to a Licensed Insolvency Trustee allows you to take the first step to controlling your financial future. Reduce your stress level, improve your quality of life, and take back control.  Many individuals wish that they had reached out to the Licensed Insolvency Trustee sooner.” -Kim Stewart, Licensed Insolvency Trustee, (https://kimstewartdebthelp.ca/)

It is a hard decision to do a consumer proposal. Some things that are important to consider are:

• Are you making any progress on paying down the debts you have? Maybe a consumer proposal will help you move forward more quickly. 
• Are the collection calls causing you stress and anxiety? Those will stop when a consumer proposal is filed.
• Has a creditor or collection agency threatened legal action? A Licensed Insolvency Trustee can tell you if it is a legitimate threat or not. 

Talking to a Licensed Insolvency Trustee is free and will give you good information to make an informed decision about dealing with your debt. Talking to a Licensed Insolvency Trustee does not commit you to anything; it gives you information you need to make the best decision for yourself. 

To learn more about consumer proposals, visit https://stepstojustice.ca/steps/debt-and-consumer-rights/1-find-out-about-consumer-proposals/.