What is a Consumer Proposal

Owe Money? What is a Consumer Proposal A consumer proposal is a formal, legally binding agreement between you and your creditors. A consumer proposal must be written and administered by a “bankruptcy trustee” or “proposal administrator”.  The proposal offers the creditors a percentage of what you owe and extends the time to pay of the debt. The terms and conditions of the proposal are not dictated by the trustee, they are determined by your financial situation and your ability to pay.

A consumer proposal to your creditors might be a good option for you.

  • If your debts do not exceed $250,000.00 (non mortgage)
  • If you are over 18 and a Canadian resident
  • If you are insolvent (you have more debt than assets)
  • If you are not currently in an open proposal or bankruptcy

First step is to meet with a trustee, they will evaluate your financial situation with a free debt assessment.  The trustee will explain the pros and cons and your various options.  If a proposal is the best solution, the trustee will file the proposal with Office of the Superintendent of Bankruptcy (OSB), To file a proposal you will need to:

  • Provide the trustee a list of all your assets and liabilities

How a Proposal Works The trustee files the proposal with the OSB and will also submit the consumer proposal to your creditors, it will include a report that will outline your financial situation and the causes of your financial difficulties. Once the proposal is filed you will:

  • Stop making payments directly to your creditors
  • Garnishments stop
  • Interest on all debts stops accumulating
  • No longer be responsible for any interest charges

The creditors have 45 days to review, accept or reject the proposal or to request a meeting of the the creditors.  The purpose of the meeting is to vote to accept, reject the proposal, the terms and conditions could be renegotiated and the proposal modified for acceptance. After 45 days there is no response from a creditor then the proposal is deemed accepted by that creditor.

  • A creditor with 25% of the proposal can request a meeting
  • OSB can request a meeting
  • A majority vote of 50%+ 1 is deemed accepted

Once the proposal is accepted you will:

  • Be responsible for making regular payments
  • Be held accountable for the terms & conditions
  • Be able to retain your home, RRSP, Pension, cars
  • Be required attend 2 mandatory counselling sessions

If the proposal is NOT accepted

  • It can be changed and resubmitted
  • File bankruptcy and creditors must accept the claim

Have more questions about a consumer proposal? Contact Us


Find out if you qualify