The Process

What is a Consumer Proposal?

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

The terms of a consumer proposal can be creative and will generally offer a percentage of your debt payable in regular monthly payments. Terms can also be negotiated that include escalating payments or a lump sum. In order to file a consumer proposal, your unsecured debts excluding your mortgage on your principal residence must not exceed $250,000 and the proposal must be completed within five years.

Kathy Lenart - Licensed Insolvency Trustee

Where do I 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 a Licensed Insolvency Trustee to review your financial situation, listen to them explain the consumer proposal process, and decide if a consumer proposal is the best solution for you to become debt free. The initial meeting is free of charge and currently can be performed either in person, via telephone or virtually. As long as the consumer proposal offers more to your creditors than they will receive in a bankruptcy and the Trustee 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, payday loans, 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 will realize on any non-exempt assets you own with realizable value and you may be required to make monthly surplus income payments. As a bankrupt, GST, income tax refunds and benefits are sent directly to your Trustee by the Canada Revenue Agency. Occasionally, creditors 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. Certain Court ordered payments, such as any support arrears collectable by the Family Responsibility Office (FRO) cannot be stopped.

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 the Office of the Superintendent of Bankruptcy

  • A stay of proceedings is enacted which stops creditor collection calls and wage garnishments

  • Creditors have 45 days to vote on the proposal terms

  • The majority of creditors voting must vote to accept terms of your proposal 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 Advantages and Disadvantages

Advantages

  • Retain and keep control of your assets

  • One monthly payment you can afford

  • Interest stops accruing

  • Settle your debt at less than 100%

  • Legal protection from your creditors

  • No separate fees – the 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 or 6 years from filing, whichever is sooner

  • Only includes unsecured debt; you must continue to pay secured creditors if you want to keep the asset (financed car, mortgage etc.)

You will be required to attend two credit counselling sessions as a term of your consumer proposal. The credit 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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