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How to File a Consumer Proposal
Being in debt is stressful, but rest assured you’re not alone and you have options to eliminate your debt and move forward to a debt-free future. Smythe Insolvency offers a variety of ways to help you and your family get out of debt, including filing a consumer proposal.
Overview
A consumer proposal is a legally binding debt settlement agreement that allows you to repay your creditors a certain percentage of what you owe them and gives you full debt forgiveness.
For many Canadians, a consumer proposal is a great way to get debt relief while avoiding bankruptcy.
Learn more about the steps required to file a consumer proposal, what type of debt it can eliminate and the eligibility and cost requirements involved below. Contact our team today to schedule your free consultation.
Meet With a Licensed Insolvency Trustee
A Licensed Insolvency Trustee (LIT) firm like Smythe Insolvency is operated by certified debt professionals who can legally file a consumer proposal for you. Our team of licensed debt professionals will review your financial situation with you and help you determine whether a consumer proposal is your best option.
Book Your Free ConsultationHOW TO FILE A CONSUMER PROPOSAL The Process
Meet With a Licensed Trustee
The first step is to meet with a Licensed Insolvency Trustee at a firm like Smythe Insolvency. Once we determine that you’re a good candidate for a consumer proposal, we will outline the amount of debt you are paying back, how much money you will pay each month and the number of months you’ll be making the payments (typically 5 years).
File Your Proposal
Your Licensed Insolvency Trustee (LIT) will file your consumer proposal and notify your creditors. Creditors have a period of 45 days to consider your proposal and inform the LIT if they agree to the proposal terms. During this time, you are not required to make any payments to individual creditors, and no further interest will accumulate on the debts. You also cannot have your wages garnished during this time frame.
Meeting Your Creditors
You need a majority of your creditors to agree with your proposal in order for it to be approved. Your LIT will take care of the creditor process and will keep you informed along the way. Your creditors can vote to accept, modify or refuse your proposal. Once approved, the proposal is binding on all creditors.
Acceptance of Your Proposal
Your consumer proposal will be approved if a majority of your creditors (based on the dollar value of proven claims) vote yes.
Once your creditors accept your proposal, it will be approved by the court, and then you will begin making payments based on the terms of the agreement.
Making Your Payments
All your monthly payments will be made directly to your LIT. The amount you pay will be the same amount specified by your Trustee in the approved proposal that you signed. There will never be any additional fees or charges added to your monthly payment.
You’ll be set up with pre-authorized monthly payments to ensure you never miss a payment.
Insolvency Counselling Sessions
The last and final requirement for your consumer proposal is to attend two insolvency counselling sessions. The Office of the Superintendent of Bankruptcy (OSB) has designed an online program for people who are in the process of a consumer proposal or bankruptcy filing. It aims to provide you with the right tools and knowledge to help you move beyond your insolvency.
Help Beyond Your Proposal
At Smythe Insolvency, we are trained to work with you to determine the underlying cause of your financial difficulties. Our qualified insolvency counsellors will assist you in improving your financial management skills, and provide you with effective budgeting strategies to help you set goals to achieve financial success in the future.
Eligibility Requirements
Consumer proposals are a federally regulated program, so you must meet some specific requirements to qualify to file. Citizenship is not a requirement, but you must be a permanent resident or residing in the country under a work permit or other immigration status. You must meet the following additional criteria:
- Have more than $1,000 in unsecured debt
- Be insolvent (your debts are greater than the value of any assets you own, or you can no longer keep up with debt payments)
- Your unsecured debt cannot exceed $250,000, not including your mortgage
- You must reside, carry on business or have property in Canada
Fees
How Much Does a Consumer Proposal Cost?
The fees you pay to file your consumer proposal are federally regulated, set by a government tariff and are consistent across all Licensed Insolvency Trustees in Canada. All costs associated with administering your proposal are included in your single monthly payment – you’ll never be billed for your Trustee’s time or come across additional “hidden” costs at any time during the your proposal.
Another important thing to understand is that you do not pay the consumer proposal fee upfront, and no costs are added to your settlement offer. Again, all Trustee fees are included in the payment you negotiate with your creditors. If your creditors agree to your proposal of $250 each month, then that is all you pay.