Frequently Asked Questions
When is a consumer proposal a good option for me?
A consumer proposal can be an effective solution if you want to keep your assets, stop collection calls and wage garnishments, and manage your debt by paying an amount you can realistically afford. Your Licensed Insolvency Trustee (LIT) handles all negotiations with your creditors, helping to relieve the pressure and stress on you.
If you have nowhere else to turn, but want to avoid the severe credit impact of bankruptcy, debt settlement, or leaving your debts unpaid, a consumer proposal may be the right option for you.
How is a consumer proposal approved?
If no meeting of creditors is requested within 45 days of filing the proposal, it is deemed approved, regardless of any objections. A meeting can be requested by one or more creditors who are owed at least 25% of the total value of proven claims. The meeting must take place within 21 days of being called, during which creditors vote to either accept or reject your proposal.
What kind of debts can be included in a consumer proposal?
A consumer proposal can significantly reduce most unsecured debts, including:
- Credit cards
- Lines of credit
- Personal loans
- Payday loans
- Tax debts
- Student loans (if 7 years have passed since you were last a student)
- Medical bills
Secured debts, such as car loans or mortgages, are excluded because they are tied to specific assets. If you stop making payments on a secured debt, the creditor has the legal right to repossess the asset and recover the loan. Secured creditors are notified of your consumer proposal, but the proposal does not alter their rights.
Who qualifies for a consumer proposal?
To qualify, you must be a Canadian resident with unsecured debts totaling between $1,000 and $250,000. You must also be able to repay a portion of your debt on a monthly basis based on what you can afford, with no interest applied to the payments.
