COVID-19 Update: Our team is conducting consultations by phone & video. In-person appointments are also available in select locations. Learn More
If you’re struggling to manage your money and feeling overwhelmed with debt stress, it might be time to consider a consumer proposal. Filing for a consumer proposal is an increasingly popular alternative to filing for bankruptcy in Canada. But even if you’ve heard the term and have an idea of what it’s all about, you’re probably still researching and wondering—is a consumer proposal worth it?
To answer this question, let’s discuss exactly what a consumer proposal is, the pros and cons of filing a proposal, and whether it’s the best option for you.
To put it simply, a consumer proposal is a deal you make with the people you owe money to—and to put it more technically, a proposal is a legally binding debt settlement agreement between you and your creditors. The reason we added in the technical jargon is because it’s very important to understand that since a consumer proposal is legally binding, only Licensed Insolvency Trustees (LITs) are authorized to administer proposals (and bankruptcies, for that matter). No other agencies, such as credit counsellors or debt consulting firms, can file a consumer proposal.
Insolvency Trustees are Officers of the Court, licensed by the Federal Government to negotiate with your creditors on your behalf. They’ll work with your creditors to agree on an offer to reduce your total debt by 30 to 80 per cent.
Some of the pros to filing a consumer proposal include:
And here are the cons (*Note: there’s not many!*):
The basic requirements to be eligible to file for a consumer proposal are:
You might also be a prime candidate for a consumer proposal if you have a steady income and money to pay your creditors each month. Another good reason to consider a consumer proposal is if you own assets that you don’t want to lose through a bankruptcy, and/or if your income would make bankruptcy payments expensive due to the surplus payments you’d be required to pay.
All that said, this is a definitely a question that is best answered by a Licensed Insolvency Trustee. All Trustees offer a free, no obligation consultation where they’ll listen to your unique situation, discuss all the debt-relief options with you and answer any questions you might have.
Filing a consumer proposal or personal bankruptcy is a significant life decision. Our team at Smythe Insolvency will provide you with the tools and advice you need to make the best decision possible. If you’d like to move forward with discussing your options to your debt stress, let’s start talking—Book your free consultation now.
Licensed Insolvency Trustee
Greg Best enjoys working with clients to create solutions for their financial needs.
CPA, CA, CIRP
Licensed Insolvency Trustee
Chris Sinclair believes a practical approach is required to solve serious financial difficulties.
Cynthia’s goal is to ensure that every client feels respected and understood and to instill hope that they can get their life back by giving them the fresh start they deserve.