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A consumer proposal is a way to make a deal with your creditors to repay your debts. In most proposals you repay less than the full amount owing, and your creditors agree to write off the rest of your debt. It's a "win-win" for both of you.
Unlike an informal debt settlement plan, a consumer proposal is a legally binding agreement that you and your consumer proposal administrator negotiate with your creditors.
Here's a quick example: Let's assume you owe $50,000 on various debts (credit cards, bank loans, lines of credit, payday loans, and income taxes). You have a job and are able to make some payments, but you can't afford to repay everything in full, including interest. You contact a consumer proposal administrator to assist you in filing a consumer proposal. You agree to pay $400 per month for the next four years, or $19,200 in total. Each of your creditors votes on the proposal, and if they accept it you simply pay $400 per month for the next four years, and at the end of the proposal your debts are eliminated.
That's one of the biggest advantages of consumer proposals! You make one reasonable monthly payment, and all of your unsecured debts are eliminated!