The Process

What is a Consumer Proposal?

A consumer proposal is an offer to compromise or settle your debts with your creditors.

A consumer proposal can be as creative as you are and either extend the payment terms, offer a percentage of your debt, be payable in monthly payments or be paid in a lump sum amount. Your unsecured debt must not exceed $250,000.00, and the proposal must be completed within five years.

Kathy Lenart - Licensed Insolvency Trustee

Where to file a Consumer Proposal in Ontario?

A consumer proposal can only be filed with a Licensed Insolvency Trustee. A referral is not required, and you can contact a local Licensed Insolvency Trustee directly to arrange an initial consultation.  A listing of trustees can be obtained on The Office of the Superintendent of Bankruptcy website or on the Canadian Association of Insolvency and Restructuring Professionals website.

Taylor Leibow has offices in Hamilton, Burlington, and St. Catharines where you will meet with an insolvency trustee to review your financial situation, explain the consumer proposal process, and analyze if a consumer proposal is the best solution for you for debt relief. The initial meeting is free of charge and currently can be performed in person, via telephone or virtually. As long as the consumer proposal offers more than your creditors will receive in a bankruptcy and the consumer proposal administrator is satisfied you can fulfill the terms offered, a proposal can be offered to your creditors. Consumer proposals can include unsecured credit card debt, lines of credit, income taxes owing to the Canada Revenue Agency and student loans if you completed your studies greater than seven years prior to filing the proposal.

Consumer Proposal vs Bankruptcy

Settle your debts

Consumer Proposal

A proposal is a formal filing under the Bankruptcy and Insolvency Act which stops creditors from pursuing you for collection, providing you immediate debt relief. The filing of a consumer proposal allows you to retain your assets and make one monthly payment to the trustee that you can afford.

ELIMINATE YOUR DEBT

Personal Bankruptcy

In a bankruptcy, the Licensed Insolvency Trustee must realize on any assets you own with equity, you may be required to make surplus income payments to the trustee and your GST and income tax refunds are sent directly to your trustee. Your creditors could also oppose your discharge from bankruptcy which would result in a court hearing.

The filing of a bankruptcy or consumer proposal will stop wage garnishments and collection proceedings.

Consumer Proposal Process

The steps to filing a consumer proposal are as follows:

  • Meet with Licensed Insolvency Trustee to review your assets, liabilities, monthly income and expenses and other relevant factors
  • Explore debt relief solutions – debt consolidation loan, debt repayment program, consumer proposal or bankruptcy
  • Meet with the trustee to sign statutory documents which are then filed with Industry Canada
  • Stay of proceedings enacted which stops creditor collection proceedings and wage garnishments
  • Creditors have 45 days to vote on the proposal terms
  • The majority of creditors voting must vote to accept terms or a meeting of creditors is called to negotiate acceptable terms
  • Court approval in 15 days from creditor acceptance

Taylor Leibow Inc. has a great success rate in creditors accepting consumer proposal terms based on our detailed analysis of your financial situation.

Consumer Proposal Pros and Cons

Advantages

  • Retain your assets
  • One monthly payment you can afford
  • Interest stops accruing
  • Settle your debt at < 100%
  • Legal protection from creditors
  • Consumer proposal administrator’s fees are included in the proposal terms
  • Ability to pay the proposal off sooner

Disadvantages

  • Impacts credit rating – R7 for 3 years from completion
  • Only includes unsecured debt and shortfall on secured debt if you surrender the asset

You will be required to attend two credit counselling sessions as a term of your consumer proposal. The counsellor will discuss budgeting, money management, how a proposal affects your credit rating, obtaining credit after your consumer proposal is complete, and setting future financial goals once you are debt-free.

If you are struggling with debt problems, reach out to Kathy or Jeff for a free, initial assessment to explore if a consumer proposal will give you a fresh start.

Book a FREE consultation with Fresh Start Now

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