Having trouble paying all your bills? … What do you do? … A consumer proposal is suitable if … Advantages … What a consumer proposal won’t do for you …

What is a consumer proposal? … repay a portion of your debts … an alternative to filing bankruptcy … Don’t be surprised if you’ve never heard …

The consumer proposal process in seven steps, from assessment to completion, and how it would affect you. Step 1: Assessment.

Financial and debt terms, legal references, proposal-related documents and events, with links to further details.

Part 3 of our introduction to consumer proposals. For Parts 1 & 2, see links at bottom of page. If you are new to the subject, we recommend reading all three in order.

Why is it called a “consumer proposal”?

It is called a proposal because you are “proposing” a deal to your creditors. Your creditors have to agree to your proposal in order for it to work.

Consumer Proposals were created to allow individual consumers to negotiate repayment plans with their creditors in the same way that large businesses can (see Proposal to Creditors). It’s a legal procedure, so there are specific rules that must be followed to ensure that both the person filing the consumer proposal and the person’s creditors are treated fairly.

What is a Proposal in Bankruptcy?
“Proposal in bankruptcy” is simply another term for a consumer proposal.

Can't I just leave a creditor out of the consumer proposal?

No. If you file a proposal to creditors, you are required to include all of your unsecured creditors. That goes for family and friends too. All of your unsecured creditors must be treated the same - it's one of the basic conditions of filing a consumer proposal.

What if my creditors vote "no" to my consumer proposal?

If your creditors vote 25 % or more against accepting your proposal, your trustee will call a meeting of creditors. At that meeting (which you must attend) the trustee will help you negotiate with your creditors in an attempt to find an agreement that both you and the creditors find acceptable.

Every consumer proposal is different, depending on your creditors, your individual case, and other factors. Your trustee’s experience will be your best guarantee of a fair settlement.

What does a proposal to creditors cost?

The trustee's fees are set by the Superintendent of Bankruptcy and are described in the BIA. In most cases, your trustee will be paid out of the proceeds of the proposal. Using our earlier example, if you offered your creditors 36 payments of $350 to retire $25,000 worth of debt, your total payments would be $12,600. The fees for the proposal would come out of that amount.

How does a consumer proposal work?

To learn more about the proposal process and how it would affect you, follow our step-by-step guide, starting with step 1 – Assessment.

Go back to Part 1: Is a consumer proposal right for you?.

Go back to Part 2: An explanation of consumer proposals.

For a free consultation on whether a consumer proposal is right for you, contact a bankruptcy trustee near you.