How to File Consumer Proposals

How to File Consumer Proposals in British Columbia

No one likes being in debt, but the good news is that you have options. Smythe Insolvency offers a variety of ways to help you get out of debt or make it more manageable. We can help you file a consumer proposal in British Columbia. A consumer proposal is a legally binding debt settlement agreement. A proposal must be filed with a licensed insolvency trustee, like one of our team members at Smythe Insolvency. A consumer proposal 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. Consumer debt proposals are the only debt settlement programs sanctioned by the Canadian government. Every debt proposal is different, however, settlements of 30 cents on the dollar are not uncommon. 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.

How to File a Consumer Proposal

You’ll need to follow a specified procedure to file a consumer proposal. The first step is to meet with a licensed insolvency trustee (LIT) firm like Smythe Insolvency. A LIT is the only debt professional who can legally file a consumer proposal for you, and we’ll be able to review your financial situation to help you determine if a consumer proposal is your best option. Once we determine that you’re a good candidate for a consumer proposal, the following steps will be taken:

• Consumer Proposal Preparation – Your proposal 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.
• Filing – Your LIT will file your proposal with the court and notify your creditors. Creditors have a period of 45 days to consider your request. During such time, you are not required to make any payments, and no interest will accumulate. You also cannot have your wages garnished during this time frame.
• Meeting with Creditors – Any creditor that holds 25% or more of your debt can request to hold a meeting, although it is not mandatory. Your LIT will take care of these meetings and keep you informed along the way. Your creditors can meet and vote to accept, refuse, or modify your proposal.
• Proposal Acceptance – 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.
• Payments – All your payments will be made directly to your LIT in the amount specified in the approved proposal. No additional fees or charges will be added to your monthly payment.
• Counseling Sessions – The last and final requirement for your consumer proposal is to attend two consumer debt counseling sessions. These sessions will teach you how to budget and manage your finances so you can stay out of debt.

What Types of Debt Can a Consumer Proposal Help With?

Consumer proposals can help Canadians eliminate their unsecured debts. Unsecured debts are defined as debts that are not secured by an asset such as a house. Consumer proposals may contain debts, including credit cards, personal loans, lines of credit, payday loans, income tax debts, and certain student loans. You may file a consumer proposal as long as your total debts do not exceed $250,000. If so, you may want to consider a Division I proposal.

Consumer Proposal 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 criteria:

• Be able to afford to pay a portion of your debts.
• 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 be a Canadian resident or have property in Canada.

How Much Does a Consumer Proposal Cost?

A consumer proposal involves repaying your unsecured creditors. Most of the time, you’ll only pay a portion of the debt you owe. If you’re wondering how much a consumer proposal costs, there’s not a simple answer. Several factors go into a consumer proposal cost, such as your amount of debt, your income, assets, family size, etc. Each situation is unique, so the best course of action is to schedule a free consultation with Smythe Insolvency. We offer consumer proposals in British Columbia. Don’t let your debt overwhelm you or cause you undue stress. Contact us today to schedule an appointment to get your consumer proposal questions answered.