What is a consumer proposal?
A consumer proposal is a formal, legally binding process that is administered by a bankruptcy trustee. In this process, the trustee will work with you to develop a “proposal”—an offer to pay creditors a percentage of what is owed to them, or extend the time you have to pay off the debts, or both. The term of a consumer proposal cannot exceed five years.
Payments are made through the trustee, and the trustee uses that money to pay each of your creditors.
If your consumer proposal is accepted
If your consumer proposal is accepted, you will
- be responsible for paying either a lump sum or periodic payments to the trustee;
- be required to adhere to any other conditions in the proposal;
- retain your assets (provided you make your payments to your secured creditors); and
- be required to attend two financial counselling sessions.
If your consumer proposal is not accepted
If your consumer proposal is not accepted, you can
- make changes to the proposal and resubmit it;
- consider other options for solving your financial problems; or
- declare bankruptcy
If you meet the conditions of your proposal
If you meet the conditions in full, you will be legally released from the debts included in the proposal.
However, if you are making monthly payments and miss three payments, or if your payment schedule is less frequent but your last payment is more than three months past due, the proposal will be deemed annulled. This means your creditors will be able take action to collect the money you owe them, unless the court has ordered otherwise, or unless an amendment to the consumer proposal has been filed. A consumer proposal that has been deemed annulled may be revived under certain conditions.