What exactly is a Consumer Proposal?
You can make an offer to your creditors to change your obligations toward them. Among other things, you can propose to make lower monthly payments stretched out over a longer period of time. Or you can propose to repay your creditors only a portion of what you owe them.
What does a consumer proposal entail?
Any individual who is insolvent, including a bankrupt, and who has debts which do not exceed $250,000, excluding a mortgage on his or her main residence, may make a consumer proposal.
In addition, a joint consumer proposal can also be filed. This situation occurs when certain consumer debtors (two or more) with close financial relations file proposals to be considered as a single consumer proposal. However, a joint proposal can only be filed if the total of the consumer debtors’ debts does not exceed $500,000.
Who can make a consumer proposal?
A person who is insolvent and whose total debt, excluding debt secured by his or her main residence, does not exceed two hundred and fifty thousand dollars ($250,000).
Creditors usually appreciate the fact that you are willing to make an effort to repay them, at least in part. There will be less of an impact on your credit rating than with a bankruptcy, you will keep all your assets and during the proposal, good budget management habits will be established.
Your unsecured creditors (for credit cards, personal loans and most of your debts) will not be legally entitled to recover what is owed to them by means such as seizing your property or wages, except if the proposal is withdrawn, refused or annulled, or if there is a discharge by the administrator before full performance of the proposal.
Par contre, les créanciers pourront continuer de récupérer les dettes qui ne seraient pas autrement éteintes par une ordonnance de libération s’il y avait eu faillite (à moins que la proposition ne prévoie explicitement un compromis à l’égard de ces dettes et que les créanciers ne votent en faveur de la proposition).
Why make a consumer proposal?
- Reduce the amount of your debts up to 70%
- Get more time to pay off your debts
- Make a single affordable payment each month according to your budget
- No interest (0%) as of filing the proposal
- Avoid personal bankruptcy
- Hold on to your assets (car, house, RRSP, etc.)
- Stop creditor seizures (protect your income)