What is it?

A Consumer Proposal is a legal process under the Bankruptcy and Insolvency Act. It is a contract that legally binds you and your creditors to the following agreement:

• That you pay back all, or just a portion, of your unsecured debt based on the amount you can reasonably be expected to pay.
• You will make one monthly payment over a period of up to five years.
• There will no further interest charge from your unsecured creditors or any additional fees for any of the debts covered by the proposal.
• All the unsecured debts covered by the Consumer Proposal will be considered legally paid in full when you have paid the proposal in full.

What benefits will I get if I file a Consumer Proposal?

Individual consumers can enjoy the many protections and advantages of a Consumer Proposal in the Greater Toronto Area (GTA):

• It immediately stops any lawsuits or garnishees and even collection calls.
• It allows you to pay off your debts without filing for bankruptcy.
• You will be able to keep your assets such as your house or car as long as you continue to keep your mortgage or car loan in good standing.
• Interest charges and penalties stop from the date you file the consumer proposal.
• It is the most effective way to make a settlement with your unsecured creditors.
• It can be a good option if you don’t qualify for a debt consolidation loan.
• It can be a good option for debts that can’t be included in a debt management program.
• The amount you will need to pay will be negotiated with the creditors and will ultimately be based on what you can afford, not what you owe, unlike in a Debt Management Plan or a Debt Consolidation Loan where you are required to repay your debts in full.

Do I qualify for a Consumer Proposal?

• If your unsecured debts total at least $1,000, but not more than $250,000 (not including your home mortgage), and
• You are insolvent (which means you are unable to pay your current unsecured debts) and
• You reside or carry on business in Canada – you qualify.

A consultation (it’s FREE) with a Licensed Insolvency Trustee such as Richard Killen & Associates Ltd. will help to properly determine if a Consumer Proposal is the right vehicle for you to solve your debt problems. We will do a detailed review of your financial situation and help you explore all your options, so you can make the decision that is best for you. It’s very empowering.

Unsecured debts are not tied to any asset that you own, like your home or automobile.

Student loans, which are also unsecured debts, can only be resolved by a consumer proposal if you have been out of school for seven years on the date you file the consumer proposal. This means that if you have been out of school for 7 years and decide to include your student loans when you file for a consumer proposal, your student loan creditor can receive a share of the proceeds and the student loan amount will be automatically discharged after the payment period.

Secured debts, like a car loan or home mortgage, cannot be included in a proposal. They are backed by an asset, like your car or your house.