Consumer Proposal Edmonton – Regain Your Financial Freedom

Seeking debt relief in Edmonton?

If you live in Edmonton or the surrounding area and are feeling overwhelmed by credit‑card balances, tax debt or payday loans, a consumer proposal may help you avoid bankruptcy and regain control of your finances. A consumer proposal is a federally regulated debt‑settlement process that allows you to negotiate with creditors to repay only a portion of what you owe. Unlike informal debt settlements, it is administered by a Licensed Insolvency Trustee (LIT) and is legally binding on all unsecured creditors. The agreement freezes interest, stops wage garnishments and collection calls, and consolidates your debts into one affordable payment for up to five years. In many cases, people are able to reduce what they owe by as much as 80%.

As Canada’s leading source for debt solutions, Bankruptcy Canada’s Edmonton‑based LITs can explain all of your options and help you decide if a consumer proposal is right for you. The first consultation is always free and confidential.

What is a Consumer Proposal?

A consumer proposal is a formal process under the Bankruptcy and Insolvency Act that lets you settle your unsecured debts without declaring bankruptcy. With help from a licensed trustee, you make an offer to repay a percentage of what you owe over a period of up to 60 months; in return, your creditors agree to forgive the remaining balance. The proposal must be filed with the federal Office of the Superintendent of Bankruptcy (OSB). Creditors then have 45 days to vote on the offer. If the majority (by dollar amount) accept, the proposal becomes legally binding on all unsecured creditors—even those who voted against it.

Only a Licensed Insolvency Trustee can file a consumer proposal. The trustee reviews your finances, prepares the required documents and submits the proposal to your creditors. Once the proposal is accepted, you make a single monthly or lump‑sum payment to the trustee, who distributes it to your creditors. You must also attend two financial‑counselling sessions designed to help you avoid future debt problems.

Example

Suppose you owe $35,000 in credit‑card and bank debts but can only afford $500 per month. Instead of making minimum payments of about $1,050 per month, you could file a consumer proposal offering to pay $12,000 over five years. Your payment would drop to about $200 per month, saving you approximately $850 every month. Because interest is frozen, all payments go toward reducing the principal.

How the Process Works

1. Meet with a Licensed Insolvency Trustee (LIT). You cannot file a consumer proposal on your own. A trustee will review your income, expenses, assets and debts to determine whether a proposal is suitable.
2. Develop a proposal. Together, you and the trustee will prepare an offer that fits your budget and provides creditors with more than they would receive if you declared bankruptcy. The repayment period can be up to 5 years, and payments are typically scheduled monthly but can be structured as lump sums.
3. Creditor vote and court approval. After filing with the OSB, creditors have 45 days to accept or reject the proposal. If over half of your creditors (by dollar value) vote to accept, the proposal becomes binding and is usually rubber‑stamped by the court.
4. Make payments and attend counselling. Once accepted, you make the agreed payments to the trustee and attend two mandatory financial‑counselling sessions. Completing the payment plan releases you from the remaining unsecured debts covered by the proposal.

Advantages of a Consumer Proposal

• Reduces your debt. A proposal allows you to repay a percentage of what you owe; creditors forgive the remaining balance. Many proposals reduce debt by 50–80 %.
• Stops interest and collection action. Interest on your unsecured debts is frozen, and creditors cannot garnish your wages or pursue legal action.
• Protects assets. You keep assets such as your home, vehicle, RRSPs and tax refunds.
• Consolidates debts into one payment. All eligible debts are combined into a single affordable payment for up to five years.
• Avoids bankruptcy. A proposal can be a viable alternative when you want to avoid the stricter asset‑and‑income rules of bankruptcy.

Potential Drawbacks

While a consumer proposal offers significant benefits, it isn’t the right solution for everyone.

• Public record. A proposal is filed with the federal Insolvency Registry, making it part of a permanent public record.
• Not all debts are included. Secured debts (such as a mortgage or car loan) and student loans less than seven years old generally cannot be discharged.
• Requires a stable income. You must be able to afford the agreed payments; missing more than two payments can cause the proposal to be annulled.
• Costs and fees. You pay an initial setup fee and the trustee retains 20 % of your payments for administration. Although less than your total debt, it does cost more than a bankruptcy.
• Credit impact. A proposal will appear on your credit report and can affect borrowing ability for several years, similar to bankruptcy.

Do You Qualify?

A consumer proposal may be an option if you:

• Owe less than $250,000 in unsecured debts (excluding a mortgage).
• Can repay a portion of your debt and have regular income.
• Want to keep your secured assets and avoid bankruptcy.
• Are able to make monthly or lump‑sum payments over a period of up to 60 months.

If your debts exceed $250,000 or you cannot afford even reduced payments, other solutions—such as bankruptcy—may be more appropriate.

Debts That Can Be Included

Most unsecured debts can be included in a consumer proposal, such as:

• Credit‑card balances and lines of credit.
• Personal loans and bank loans.
• Tax debt and amounts owed to the Canada Revenue Agency.
• Payday loans.
• Student loans (if you have been out of school for at least seven years).

Secured debts (e.g., mortgages or car loans) cannot be reduced through a proposal. Child support, spousal support and some court‑ordered fines are also excluded.

Consumer Proposal vs Bankruptcy

Both a consumer proposal and a bankruptcy provide legal debt relief, but there are important differences. A bankruptcy is usually chosen when you have little or no capacity to repay your debts. It stops collections and can discharge unsecured debts more quickly—sometimes in as little as nine months. However, bankruptcy may require you to surrender some assets and make surplus‑income payments, and it stays on your credit report longer. A consumer proposal allows you to keep your assets and avoid surplus‑income payments but requires you to repay a portion of your debts over time. Which option is best depends on your income, assets and the amount you owe.

Alternatives to a Consumer Proposal

Before filing a consumer proposal, explore all debt‑relief options available in Alberta:

Debt‑consolidation loan

A consolidation loan combines multiple debts into a single loan with a lower interest rate. It can be a good way to pay off credit cards, payday loans and other bills if your credit score is strong enough. However, qualifying may be challenging, and you still repay the full amount owed.

Debt Management Program (DMP)

A DMP is arranged through a credit‑counselling agency. The agency negotiates with your creditors to reduce or eliminate interest and consolidate your payments into one monthly amount. You repay 100 % of your debts but benefit from a lower interest rate.

Orderly Payment of Debts (OPD) program (Alberta)

Unique to Alberta, the OPD program consolidates unsecured debts into a single payment at a fixed 5 % annual interest rate and provides legal protection from creditors. There are no start‑up fees, and you receive budget counselling and financial‑literacy training. You must repay the full amount owed within five years, so total payments are often higher than with a consumer proposal.

Informal Debt Settlement

Some for‑profit firms advertise debt‑settlement services or offer to file consumer proposals on your behalf. Be cautious—only Licensed Insolvency Trustees are authorised to administer proposals. Many companies charge high fees and then refer you to a trustee. Speaking directly with a non‑profit credit counsellor or LIT ensures you understand all of your options.

Why Choose Bankruptcy Canada’s Edmonton Team?

• Licensed & regulated experts. Our Licensed Insolvency Trustees are authorised by the Office of the Superintendent of Bankruptcy to file consumer proposals and bankruptcies.
• Local support. We understand the unique economic challenges faced by Edmonton residents and will work with you to find the best solution. Our team offers free, confidential consultations and compassionate guidance throughout the process.
• No middlemen or hidden fees. You speak directly with a trustee from the very first meeting. There are no referral fees, and our costs are included in your proposal payments.
• Comprehensive advice. We will explore every option—consumer proposal, debt management, OPD or bankruptcy—to ensure you make an informed decision.

Get Started Today

Dealing with debt is stressful, but you don’t have to face it alone. Speak with one of our Licensed Insolvency Trustees to discuss whether a consumer proposal is right for you. Call us today for a free consultation and take the first step toward a debt‑free future.