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Consumer Proposal in Canada (updated 2022)


  • Immediate relief from collection calls
  • Immediate relief from wage garnishments
  • Significantly reduce your total debts
  • Pay off your consumer proposal early
  • Legally binding between you and your creditors
  • Agreed payment never changes


How Does Consumer Proposal work In Canada and How to File for it?

What is a Consumer Proposal?

A consumer proposal is a legal procedure that is developed for people that are not able to pay their debts completely, but who have the capability to pay a portion of the cash owing. For those that are only able to afford to settle a percentage of the debt they owe, a consumer proposal can be a viable alternative to bankruptcy.

Filing a Non-mortgage Consumer Proposal

If you are having problems repaying the financial debts you owe, a consumer proposal might be a choice for you. Legitimately, the only individual that is able to administer the proposition is a Licensed Insolvency Trustee.

When you consult with the trustee, she or he will certainly review your monetary scenario and also provide you with details on the alternatives that are available to you. The trustee will certainly give you information on all of your alternatives (not just the ones that they can aid you with) so that you have the details you require to make a notified decision.

When you file a proposal, a Licensed Bankruptcy Trustee will assess your economic circumstance and establish what a reasonable deal to your lenders will certainly be. If the lenders that are owed more than 50% of the financial obligation select to accept, after that all of your unprotected lenders are bound by the terms of the proposal.

If your lender’s pick to accept the proposition, after that you are called to make regular monthly repayments to the trustee, as detailed in the proposal agreement. These payments are then dispersed to your lenders.

Typically, a consumer proposal lasts between one as well as 5 years, however, you can repay the proposal extra rapidly if you are able.

I don’t have to pay back the entire debt?

A Licensed Insolvency Trustee will work together with you to come up with a proposition for your lenders. In that proposal will certainly be a deal to pay your lender’s a portion of what they’re owed, extend the time duration to repay your debts, or both.

Once you have made every one of the payments, the remaining arrearage will be gotten rid of. You will certainly then be able to begin your economic life fresh as well as obtain a possibility to live debt-free moving forward.
Each economic situation is various as well as there are no “one-size fits all” answers that will be the ideal choice for every person.

How Much Does A Consumer Proposal Cost?

First, we need to understand why the creditors will accept your consumer proposal then we can discuss how much the consumer proposal will cost you.

The creditor will be willing to accept your consumer proposal only if they will receive more than they would benefit if you file personal bankruptcy.

The fees are calculated based on each individual financial situation. Most of the time here is the breakdown cost:

  • The filing consumer proposal fee is $100.00 paid to the Office of the Superintendent of Bankruptcy
  • The counseling fee is $170.00 paid to the Licensed Insolvency Trustee
  • The administration fee is about $1,500 flat fee plus 20% of creditor distributions, again paid to the Licensed Insolvency Trustee

However, the amount you will have to repay while in a consumer proposal will depend on a few situations and can reduce principal repayment to as low as 25% of the original amount owing.

Having that said, all fees are included in a monthly payment for the agreed amount over a maximum term of 5 years and this is what you need to stay focus on and not how much the Licensed Insolvency Trustee get paid or how much you need to pay to the CRA and so on.

Why Consumer Proposal is the best debt relief option?

Let’s start with an example. Let’s say your all debts are $35,000.

This is how much you would pay in 5 years for different debt-relief alternatives:

Consumer Proposal: $204 / monthly for a total cost of $12,250 – Saving $22,750
Debt Consolidation: $778 / monthly for a total cost of $46,713 – Saving (negative) -$11,713
Credit Counselling: $583 / monthly for a total cost of $35,000 – Saving $0
Don’t do anything, and repay your own debt and add all the interest costs: $887 / monthly for a total cost of $53,326 – Saving (negative) – $18,326

In conclusion:

What you need to remember is: as you can see from above there two major services that can really help you to get out of debt:

  1. Credit Counselling
  2. Consumer Proposal


Choosing to file a consumer proposal?

If, after going over your alternatives, you choose that filing a consumer proposal is the right selection for you, and the deal is prepared and also sent to every one of your unprotected lenders. The deal that is sent will certainly be to pay off just a portion of the financial obligation that you owe.

Your financial institutions will have 45 days to elect on whether they wish to approve the terms of your proposition. If several of your lenders hold the case to a minimum of 25% of the outstanding financial debt, they have the ability to request a meeting of creditors. This meeting must be held within 21 days of it being called and also your financial institutions will certainly vote on whether to accept your proposal during this meeting.

If the majority of your financial institutions elect to accept your proposal, after that every one of your unsafe lenders is bound by the regards to the proposition. This is a major benefit to a non-mortgage consumer debt proposal. If you intended to bargain a decreased repayment timetable with each lender separately (beyond the consumer proposal process) after that you would certainly need to encourage each as well as every creditor to accept your terms. Nonetheless, with a consumer proposal, just the majority must concur.

What are several of my other debt remedy choices?

As pointed out, there are numerous debt solutions to consider. A consumer proposal makes one of the most sense when financial obligation consolidation, debt negotiation as well as financial debt administration won’t function.

An alternative to submitting a consumer proposal is bankruptcy. Nonetheless, before declaring bankruptcy, it is necessary to comprehend the key distinctions between bankruptcy and a consumer proposal.

The bulk is determined by the quantity of debt owed. If any creditor or collection of financial institutions who are owed greater than 50% of the impressive financial debt ballot to accept the terms, after that all must concur. For example, if you owe $40,000 in financial debt, any type of creditor or group of lenders that are owed more than $20,000 would be considered the bulk.

What if the Consumer Proposal is approved?

If the proposal is approved, there is a 15-day waiting period while the court authorizes the contract. If the proposal is declined, you are able to submit a changed proposition with the trustee.

After your proposal is accepted, you will certainly be required to make regular monthly payments as laid out in the terms of the contract. It is vital that you make these repayments as missing 3 payments over the program of the proposition might lead to the arrangement being annulled.

Should I select a credit counselling for my consumer proposal?

As a component of the consumer debt proposal procedure, you will certainly be needed to go to two credit counselling sessions. During these sessions, you will discover financial obligations, budgeting, finance, and extra.

As soon as you have actually made all of the settlements as detailed by the proposal, the remaining impressive financial obligation will be released. This means that you will no more owe the cash. You will obtain a Certificate of Complete Performance and you will certainly then be complementary to reconstruct your monetary life.

Managing large amounts of financial debt can be really challenging.

Not just is it challenging to pay back the debt, yet financial obligation can be incredibly stressful. Juggling costs, managing lenders, and stress and anxiety and anxiety can make it seem like there is no means out. The great news is that this is not real.

One choice that many individuals choose is a consumer proposal BC, consumer proposal Alberta, consumer proposal Toronto, or wherever they live. This is a legal procedure that is regulated by the government Bankruptcy and Insolvency Act, and as a result, the procedure is the very same throughout the country.

If you are dealing with financial obligations and looking for a solution, talking with a Licensed Insolvency Trustee is a great idea. These are people that are licensed and controlled by the federal government and are able to provide assistance if you are battling with financial obligation. When you meet with a trustee, he or she will certainly assess your financial scenario and also supply you with information on the available financial debt alleviation alternatives.

Canada’s consumer proposal choices are typically considered by those who are having difficulty repaying their financial debts. With a consumer proposal in Canada or various other provinces, the bankruptcy trustee will review your circumstance and identify what a reasonable deal to your creditors will be. In most instances, the offer will certainly be for a section of what you owe.

A neighbourhood consumer proposal in any kind of region of the country can just be submitted with a Licensed Insolvency Trustee. When a proposal is submitted, your lenders know that you have talked with a trustee who has actually assessed your economic circumstance. They understand that the deal you are submitting is what you are able to pay for as well as that, if they turn down the proposition, you will likely have no choice however to submit for bankruptcy.

Canada Consumer Proposal and also Other Choices

Each monetary scenario is various. This suggests that the remedy to each person’s financial issues will certainly be different. When you consult with a trustee, she or he will let you understand what options are available to you. Nevertheless, a trustee will certainly never try to press your right to select one alternative or an additional. The choice is constantly completely as much as you.

If you make a decision that a consumer proposal is not appropriate for you, you still have choices. An additional option that can be carried out by a trustee is declaring bankruptcy. Like a consumer proposal, this is likewise a lawful process. You get legal security from your financial institutions as well as all communication will certainly be managed by the trustee. Nonetheless, there are substantial distinctions.

What happened after you declare bankruptcy?

When you declare bankruptcy, you might lose a few of your assets, depending on exactly how much you own. With a proposition, you will not shed any one of your possessions as long as you have the ability to make the regular monthly proposition settlements.

Additionally, if you apply for bankruptcy, you might not have the ability to hold particular professional certifications. This is not an issue when filing a proposition.

The selection is ultimately up to you and also you are able to pick whatever alternative is best for your financial scenario. A trustee will never pressure to select a detailed remedy.

Filing a consumer proposal know, a consumer proposal BC, a consumer proposal Alberta, or a consumer proposal in any type of region of Canada can be a good option for those that have the ability to settle a section of the financial debt they owe, but not the total. It allows you to efficiently only pay back a little of the debt you owe, however, to remove all of your unsafe financial debt.

If you are in a proposal where you are dealing with debt, or if you believe that a consumer proposal can be an excellent alternative for you, then you may wish to book a visit with a trustee. He or she can aid you to figure out if this choice will function for you.

Advantages of Canada’s consumer proposal strategies

As the # 1 choice to declaring bankruptcy a consumer proposal offers a number of benefits over other debt alleviation alternatives:

  • Lower your financial debts by approximately 80%;
  • Keep all your properties consisting of any kind of equity in your residence;
  • Combine debts into one, economical, regular monthly settlement;
  • Freeze interest on your financial debts;
  • Legally bind all financial institutions to your offer consisting of payday lending institutions and also the Canada Revenue Agency CRA; .
  • Avoiding the bankruptcy process;
  • Stop telephone calls from a debt collection agency as well as wage garnishments.

A consumer proposal is a lawful procedure under the Bankruptcy & Bankruptcy Act. When you submit a consumer proposal you get immediate security from your financial institutions. If you are having financial troubles with accounts in collections or are in defaults on repayments, a consumer proposal stops lenders from continuing to seek you for settlement.

Debts that Can Be Included in a Consumer Proposal.

A consumer proposal can only include financial unsecured debts. This indicates financial obligations that are not backed or “safeguarded” by a property. Examples of unsecured debts include:

· Bank card financial obligation.

  • · An unprotected line of the credit report.
  • · Payday advance.
  • · Unsafe small business loan.
  • · As well as lots of other comparable financial debts.

Safe debts can not be included as a part of the proposal. If you own a house or a lorry, for instance, you will certainly require to continue to make settlements on these assets if you wish you maintain them. If you are not able to stay up to date with your regular monthly home mortgage or automobile funding repayments, your creditors have the right to retrieve these items.

Where to Obtain a Consumer Proposal?

A consumer proposal needs to be filed by a Certified Insolvency Trustee. Just these specially-trained people have been licensed by the Officer of the Superintendent of Bankruptcy OSB to provide bankruptcy procedures such as consumer proposals.

If you wonder regarding where to get a consumer proposal, it is most likely because you are currently having problems with financial obligations and trying to find a way out. High levels of financial obligation can be really tough to handle. When you owe a huge amount of financial debt, you invest a great deal of effort and time trying to make settlements. Nevertheless, if you owe a lot, these repayments usually just pay for the interest on the debt and maybe a percentage of the principal. Continuing to just make minimum payments every month will certainly suggest that it will take you a long time to settle your debt, and also you will invest a great deal of cash doing so. Having financial debt for a long time makes an effect on your life.

While you have debt troubles, you need to deal with phone calls from financial institutions and debt collection agencies, sleepless evenings filled with concern, and also the tension of struggling to make ends fulfill. Consulting with a trustee can assist you to solve your debt difficulties.

Collaborating with a Bankruptcy Trustee.

As stated, the only method to submit a consumer proposal is with a Licensed Insolvency Trustee. A lot of trustees use a free assessment, so you can talk with one at no cost to you. When you sit down with.

A trustee, she or he will review your monetary scenario and give you information on every one of the options that are readily available to you. Unlike some other monetary specialists, trustees are legally bound to provide you information on all feasible debt-relief choices, not simply those that they can provide. The trustee will also address any type of questions you have such as what is a consumer proposal, just how does a consumer proposal job, and a lot more.

If you determine that you want to proceed with the proposal procedure, the trustee will help you file the required paperwork with your lenders. She or he will additionally be in charge of all communication with your creditors as soon as you submit.

What takes place if a consumer proposal is declined?

If the proposition is denied, we will contact your unsecured financial institutions to identify if they would certainly approve alternative terms. In several instances, enhancing your settlement by $50 or $100 per month may be enough to obtain your creditors to accept the proposition.

How does a consumer proposal contrast to various other financial obligation relief services?

In this example, a female called Mary is carrying $25,000 in charge card debt. She submits a consumer proposal, and a Licensed Insolvency Trustee works out with her lenders to ensure that she only needs to pay back 60% of her financial obligation, or $15,000, over a period of five years. Below how her consumer proposal contrasts to over debt relief options.

Just, how Does a Consumer Proposal Work?

If you are battling with financial obligation and unable to make ends meet, a consumer proposal might be the right alternative for you. As soon as you know where to get a consumer proposal as well as what is a consumer proposal, you can determine if filing one is appropriate for you.

If you choose to file, the trustee will certainly establish a reasonable deal and send it to all of your unsecured creditors. A consumer proposal can just consist of unsafe, financial obligation (such as a bank card debt, unprotected credit lines, personal finances, etc). It can not include secured debt that is backed by a property, such as an automobile car loan or an auto loan.

Once the proposal has actually been sent out to all unsafe creditors, they have 45 days to elect on whether they want to accept the deal. If any kind of lender or combination of financial institutions that are owed more than 50% of the arrearage agree to the proposal, after that all of the unsecured creditors named in the proposition are bound by the terms of the agreement.

If your lenders concur to the terms, then your duty is to make the month-to-month repayments as detailed in the paper. If you miss out on a total of 3 payments over the lifetime of the proposition period, your proposal can be annulled.

When a consumer proposal is approved?

A LIT can assist you to negotiate a reasonable rates with your lenders, with workable fixed monthly payments for approximately 5 years or a swelling sum payment. A proposal is authorized when the creditors that own the bulk of your financial obligation have concurred to the regards to your proposition as well as the courts authorize it. Once approved, the proposal is binding on all celebrations. As long as you then accomplish the terms of your proposition, you will be launched from the unsafe financial obligations you owed.

As a component of the consumer proposal process, you will certainly also be called for to go to two economic therapy sessions. In these sessions, you will certainly discover budgeting, handling debt, and methods to avoid future debt troubles. The objective is to offer you the skills you need to avoid financial obligation troubles moving forward.

How does a Consumer Proposal impact my mortgage?

A Consumer Proposal does not affect secured financial debt, such as a home loan. You will certainly still require to make your regular mortgage settlements if you make a Consumer Proposal.

Legal Security with a Customer Debt Proposition.

When you submit a consumer credit history proposition, you will get legal security from your lenders. This suggests that your lenders are restricted from taking any kind of action versus you to collect on the debt owed as soon as you file the proposition.

Wage garnishments that have actually been taken into place by your unsecured creditors will stop as soon as the proposition is filed.

When you submit a consumer financial obligation proposal, all communication with your creditors is dealt with by the trustee from that factor ahead. This means that filing a consumer proposal places an end to phone telephone calls from creditors and also collection agencies.

What happens if I co-signed a loan with someone?

If you file a consumer proposal (or apply for bankruptcy), your co-signer will certainly be accountable for paying off these debts; the financial debt will certainly not be gotten rid of unless you submit a joint consumer proposal.

A Consumer Proposal and Your Assets.

If you declare bankruptcy, you might shed several of your possessions to your lenders, relying on your scenario as well as the number of properties you possess. Nonetheless, with a customer financial debt proposal, your possessions are shielded. As long as your creditor’s consent to the proposition, as well as you, make your payments, then your properties are secured.

If you possess a residence, not only will you have the ability to keep your residence, yet your lending institution is not able to change the regards to your home loan or foreclose on your home even if you have submitted a consumer proposal. As long as you continue to make your home loan repayments, you should have no issues.

If you require to restore your mortgage while you are completing a consumer proposal, you will need to verify to your lender that you will be able to remain to make the settlements.

The exact same defenses put on any vehicles you might have. As long as you do not miss payments, you can keep your vehicle.

In the bulk of cases, you will certainly additionally have the ability to keep cost savings in an RRSP, RESP, or TFSA when you file a consumer proposal. This differs from bankruptcy, where you might lose your RESP or TFSA contributions (along with RRSP contributions made in the last 12 months) when you submit.

Why Would Creditors Accept a Consumer Proposal?

You could be questioning why any type of lender would certainly consent to accept much less than is owed to them. When creditors see that a person has reached a factor where they are submitting a proposal, they know that the person is struggling economically. They recognize that, if the customer’s financial obligation proposal is rejected, the individual will likely have no choice but to apply for bankruptcy. If this happens, the financial institution will likely not get as much money as if they had actually approved the proposal. Several financial institutions get very little cash in a bankruptcy process. Given that creditors would certainly instead get some of the money owed to them than nothing, they are most likely to accept the proposition.

Creditors will likewise think about the prices of taking lawful activity to accumulate some of the financial obligations owed if they do decline the proposition. Lawful procedures are frequently really extensive as well as pricey and, hence, they typically pick to approve a consumer proposal instead.

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