A consumer proposal is a formal proceeding under the Bankruptcy and Insolvency Act wherein you offer a compromise to your creditors to settle your debts. A consumer proposal can only be filed with a Licensed Insolvency Trustee (“LIT”) who acts as the administrator of your proposal. A free initial appointment can be scheduled with a LIT who will review your financial situation and explain the following process:

  • A detailed analysis of your assets, liabilities, monthly income and expenses, any transfer or sale of assets, co-signors on debts and garnishments of income will be performed by the LIT
  • The LIT will explore possible solutions with you – debt consolidation loan/mortgage refinance, debt management program through a not for profit credit counselling agency, consumer proposal or bankruptcy
  • The terms of your proposal will be formulated, offering your creditors more than they would receive in a bankruptcy at a payment term you can afford over a maximum of five years. The terms of the proposal can be creative with set monthly amounts, seasonal monthly amounts, lump-sum payments, third party payments or any combination.
  • Statutory documents will be signed by you and filed with the Official Receiver which institutes a “stay of proceedings” stopping most unsecured creditors legal actions to collect their debt (garnishments, etc.)
  • The creditors have 45 days to vote on the proposal, and the majority of those voting (50.1% of the dollar value) must vote to accept the terms offered
  • If more than 25% of your creditors are voting against the proposal, then the LIT will call a meeting of creditors
  • The LIT will negotiate with any dissenting creditors to try and amend the proposal to terms agreeable to yourself and your creditors
  • You must attend two counselling sessions on budgeting, money management, and rebuilding credit
  • You are free to deal with your assets and income during the term of the proposal
  • You can pay the proposal off sooner if your financial situation improves
  • Once the terms of the proposal are completed, the LIT will issue a Certificate of Completion
  • The proposal will remain on your credit report as an R7 for the earlier of: three years from completion of your proposal or six years from filing

If you are unable to pay your debts in full, a consumer proposal is a solution that can provide you with relief and enable you to move forward with a fresh start. Feel free to contact Taylor Leibow Inc., Fresh Start Now to discuss your specific situation over the telephone, virtually or in person.

By Kathy Lenart Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)