Consumer Proposals in Canada
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.
What is a consumer proposal?
A consumer proposal is a legally binding agreement that you and your consumer proposal administrator negotiate with your creditors.
Here's a typical example of someone who would file a consumer proposal: 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 the advantage of a consumer proposal! You make one reasonable monthly payment, and all of your unsecured debts are eliminated! Would a consumer proposal work for you? Contact a consumer proposal administrator today to arrange a no charge initial consultation.
Who can file a consumer proposal?
You can file a consumer proposal if you owe between $1,000 and $250,000 (not including the mortgage on your house), and you are insolvent. (Insolvent means you are unable to pay your debts, and your debts are larger than your assets). Since your proposal will involve you making payments to deal with your debts, proposals are most successful if you have a job, or a stable source of income.
What debts can I include in a consumer proposal?
A consumer proposal includes your unsecured debts, such as credit cards, bank loans, payday loans, finance company loans, and even income taxes. Proposals do not discharge your secured debts (like your house mortgage or car loan).
For more information, please read our articles on Why would a creditor accept my proposal?, and How much does a proposal cost?, and Will My Proposal Affect My Spouse?.
For a detailed review of your personal situation, please more information, please read our articles on contact a licensed proposal administrator for more information, and to arrange a free initial consultation.
