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How Does a Consumer Proposal Work?
A consumer proposal is a legally binding agreement between you and your creditors, administered by a Licensed Insolvency Trustee (LIT). You will draft a proposal and, if accepted, it becomes a formal settlement for your unsecured debts. In short, you will pay a regular monthly amount over a set period of time.
Step 1: Meet with a Licensed Insolvency Trustee
Contact one of our Licensed Insolvency Trustees to schedule a confidential consultation. Your Trustee can recommend if a consumer proposal is the right solution to your financial challenges and if you qualify.
To qualify for a consumer proposal, you must have less than $250,000 in unsecured debt. You must also have a sufficient income to make monthly payments to pay a portion of the debt.
Step 2: Prepare the Proposal
If you decide to go with a consumer proposal, work with your LIT to draft the proposal. Remember to highlight the advantages creditors will have in your proposal and decide on a monthly payment that you can commit to.
Step 3: File the Proposal
Once you and your LIT have completed all the required documents the LIT will file your proposal with the Office of the Superintendent of Bankruptcy and will submit your proposal to your creditors. Your LIT will provide the creditors with all the information they need to decide whether to accept or reject your proposal.
Step 4: Creditor’s Meeting
Once filed, your creditors will have 45 days to vote on the proposal. A simple majority is all that is needed for your proposal to be deemed accepted by your creditors, regardless of any objections. However, if 25% or more of your creditors reject or are seeking alternative amounts for the proposal, a first meeting of creditors will take place to try to re-negotiate terms of the proposal.
Step 5: Approval and Payments
If the majority of your creditors accept your proposal you will begin to make your monthly payments. Your payments should be completed within five years and your proposal will stay on your credit record for three years.
Step 6: Become Debt Free
Once you complete the terms of your consumer proposal, you will be released from all the unsecured debts you owed on the day you filed. You now have a fresh start and can begin to rebuild your credit again.
Finding the Right Solution
Deciding if a consumer proposal is the right course of action for you can be difficult. To learn more about how a consumer proposal can work for you, get a free consultation with our expert MNP Licensed Insolvency Trustee today.