A Consumer Proposal: What is it?

• A legal agreement between you and your creditors called a consumer proposal enables you to settle your debts for less than the entire amount owing.
• It is a type of debt relief that is handled by a licensed insolvency trustee (LIT). The LIT will collaborate with you to draft a proposal outlining your debt repayment strategy over a certain length of time, often up to five years.
• Your creditors are then asked to approve this proposal.
• You will make payments to the LIT, who will then give the money to your creditors if they accept the proposal.
• As a result, you will only have to pay one payment each month as opposed to several payments to several creditors. Your outstanding obligations will be forgiven, and you will no longer be in debt, once you have made all the payments stated in the plan.

How Does a Consumer Proposal Work?

• Consultation with a licensed insolvency trustee is the initial stage in the consumer proposal procedure.
• To assist you in deciding if a consumer proposal is the right course of action for you, the LIT will assess your financial status.
• If you want to proceed with a consumer proposal, the LIT will assist you in developing a proposal that details your debt repayment strategy.
• The proposal will contain information on your earnings, costs, possessions, and debts. A justification for why you are unable to pay off your obligations in full must also be included. The LIT will send a copy of the plan to your creditors as well as file it with the Office of the Superintendent of Bankruptcy (OSB) once it is finished.
• The proposal will be evaluated by your creditors for 45 days before they decide whether or not to accept it.
• The plan will be approved if it has the support of the majority of your creditors (based on the total amount owing). If the proposal is turned down, you and your LIT can edit it and resubmit it for consideration.
• You will start paying the LIT the amounts specified in the proposal if it is approved. The money will subsequently be distributed to your creditors by the LIT.
• Also, during the duration of the proposal, you will be expected to attend two sessions of financial counseling.

Is a Consumer Proposal Right for You?

Anybody unable to make payments due to heavy debt may consider making a consumer proposal. Yet, you must consider carefully whether a consumer proposal is the best option for your situation. These are some things to think about:

 Debt Load

A consumer proposal often works best for borrowers who are drowning in debt and are unable to make payments. It can be more advantageous to look at alternative debt relief options if you don’t have a lot of debt.

 Monthly Income

You must earn enough each month to fulfill both your living expenses and the proposal’s payment schedule. A consumer proposal might not be your greatest alternative if your revenue is insufficient.

 Assets

A consumer proposal can be a smart choice if you have assets that you do not want to sell to pay off your obligations. Some debt relief choices, however, can be more suitable if you don’t have any assets.

 Credit Score

A consumer proposal will have a negative effect on your credit score, so you should decide if this is something you are concerned about.

 Eligibility

To be eligible for a consumer proposal, you must fulfill several requirements. You must look into alternative debt relief solutions if you do not match these requirements.

Say Goodbye to Debt

Not sure where to start? Overwhelmed with all the information and stressed out with so many debts? Then, TALK TO US FIRST! 

It is BEST to know the Debt Relief Programs in Ontario so that you WILL KNOW YOUR OPTIONS. Get a FREE INITIAL CONSULTATION and understand the available options you have. We have a proven track record of excellent customer service that focuses on helping Canadians get a fresh start. 

Get a FREE Savings Estimate now and see your Options!