Consumer proposals in 11 easy steps

What’s a consumer proposal?

The first thing you need to know: a consumer proposal is not bankruptcy. It’s true that the process has some similarities, but it’s an altogether different solution.

A consumer proposal is actually a way to avoid bankruptcy. It’s a settlement offer to your creditors to repay part of your debts and/or repay the debts over a longer period of time, for a maximum period of 5 years.

The consumer proposal has a number of advantages. These include:

• You only pay back part of the money
• The interest rates stop adding up as soon as you file the proposal
• You make just one payment per month
• You’re protected against seizures, prosecution and creditors cutting off your services (like your phone or electricity)
• You’re under less stress since you no longer need to answer calls from your creditors!

How does a consumer proposal work?

Consumer proposals are done in stages. And you won’t go through it alone. Throughout the process, you’ll be supported by a knowledgeable counsellor. The process you’ll go through together is described here.

Scheduling a meeting: a simple but important first step

This is the only step you’ll have to take on your own: book an appointment. Are you feeling embarrassed or awkward about your financial situation? You don’t have to be! Our counsellors are there to help you, not to judge⁠—and your confidentiality is guaranteed.

Our one piece of advice: don’t wait. The sooner you speak to an expert, the sooner your financial problems will be behind you.

The first meeting: identifying the best option

Everyone’s financial situation is different. That’s why in the first meeting, your counsellor will take the time to examine your specific case. Their goal is to identify your needs, understand the problems you’re facing and determine the best solution for resolving your financial situation.

If the best solution is a consumer proposal, your counsellor will work with you to create an offer for your creditors. What kind of offer? A reasonable settlement offer that takes your ability to pay into account. One that works for you.

Signing the document: the solution is formalized

You sign a few documents to formalize the consumer proposal, sometimes on the same day as your preliminary meeting.

Filing a consumer proposal: the phone stops ringing

Once the papers are signed, your counsellor files the proposal at the Office of the Superintendent of Bankruptcy (no, this doesn’t mean you’re declaring bankruptcy, this is just the name of the organization that takes cares of consumer proposals).

This is an important step. It marks the moment your proposal is officially filed. It also marks the end of the calls from your creditors. You know the debt collection agency that calls you every day? They’ll finally stop harassing you. That’s because your counsellor is now the one negotiating directly with your creditors.

The notice to your creditors: taken care of by your counsellor

Very soon after the documents are filed (within 1 to 5 days), your counsellor informs each of your creditors of your proposal.

Acceptance of the proposal (or request for a meeting of creditors): within 45 days

Once they’re received your proposal, your creditors have up to 45 days to respond.

They have the right to call a meeting of creditors. A meeting of creditors is a meeting where the creditors vote whether to accept or refuse the proposal you have submitted.

For this meeting to take place, at least 25% of your creditors must request one. If this doesn’t happen, there’s no meeting. This means your proposal has been accepted! You’re closer than ever to your new start!

The first consultation meeting: ensuring you don’t fall back into debt

Within 10 to 60 days of filing your consumer proposal, you will sit down again with your counsellor to take stock of your situation. Once again, they are only looking to guide you, not to criticize you.

How can you better manage your budget? How can you improve your spending habits? How can you quickly recognize the signs of having problems with money? These are the kinds of things you’ll discuss. Your counsellor will give you tips to make sure you don’t end up in another critical situation.

The meeting of creditors: only if necessary

Has a meeting of creditors been called? Don’t worry. Your Licensed Insolvency Trustee will take care of it. During the meeting, the trustee will try negotiate an agreement that works for you and the majority of your creditors. If the majority (50% + 1) votes in favour of the agreement, it means your proposal is accepted.

And if your creditors vote to reject the agreement? You still have other solutions. Your counsellor will talk to you about alternatives.

The second consultation meeting: planning for the future

A consultation meeting is always helpful. But two, even better!

During your second meeting (40 to 210 days after the proposal is filed), your counsellor will discuss the following with you: the causes behind your money problems and managing your finances and credit.

They will also show you available resources for handling money problems.

The creditors vote to accept: you’re approaching the finish line

The final approval of your proposal is up to the court. The word “court” is intimidating, but don’t worry, you don’t have to go. Your proposal is simply considered to be approved by the court if no one requests changes within 15 days of the creditors’ acceptance.

Freedom from debt: starting over

Once you have made all the payments set out in your consumer proposal, the Licensed Insolvency Trustee issues a certificate releasing you from debt.

You should be really proud for having taken action. You’ve regained control of your life, one step at a time. You have a major weight off your shoulder