How does a consumer proposal work?

A consumer proposal allows you to offer a settlement to your unsecured creditors payable over a maximum of 60 months.  The filing of a consumer proposal gives you immediate protection from your creditors and no further payments are made directly to your unsecured creditors during the process.  A proposal works as follows:

• You meet with a Licensed Insolvency Trustee to review your financial situation in detail (assets, liabilities, income and expenses, any transfer of assets, etc.). The trustee will explore many solutions with you – one of which is a consumer proposal.
• To file a consumer proposal, you must owe less than $250,000.00 and be insolvent. This means that if you sold all your realizable assets you wouldn’t be able to pay your debt in full and are struggling to make payments as they become due.
• The trustee will explore what would be realized in a bankruptcy and then you offer more to your creditors in the proposal. The amount you offer to your creditors includes the administrator’s fees and no further interest is payable.
• The creditors have 45 days to vote and a majority of the creditor voting must accept the terms offered. If the original proposal is not accepted, the trustee will negotiate with the creditors and yourself to an amount you can agree on.
• Once the proposal is accepted by the required majority of creditors, all of your unsecured creditors are bound by the proposal.
• You make monthly payments to the trustee and the trustee will distribute the funds to your creditors typically every 6-12 months.
• You will have to attend two counselling sessions which will teach you about budgeting and rebuilding credit.
• The proposal is reported on your credit report as an R7 for 3 years from completion of the proposal.

Debts that survive a proposal under S178 of the Bankruptcy and Insolvency Act

Amounts that you owe for support or maintenance, debt incurred by fraud or misrepresentation or a student loan if you have not been out of school for at least 7 years will survive your proposal and you will be responsible to pay any remaining debt owing.  These creditors can continue to accrue interest during the proposal term.

Consumer proposal help in Hamilton, Burlington and St Catharines

If you can afford some payment to your creditors but are not reducing your principal debt, reach out to Taylor Leibow Inc. to see if a consumer proposal could give you a fresh start financially.  Our trustees would be happy to personally meet you in one of our offices or virtually.