A consumer proposal is a legal process that provides debt relief to individuals who are struggling with debt and are unable to repay their creditors. In Canada, consumer proposals are governed by the Bankruptcy and Insolvency Act and are administered by licensed Insolvency Trustees.
A consumer proposal allows you to settle your debts for less than the full amount you owe. You work with an Insolvency Trustee to determine a manageable payment plan that works for you and your creditors. This proposal is then submitted to your creditors for their approval. If the majority of your creditors accept the proposal, it becomes legally binding on all of your creditors, even those who may have voted against it.
Advantages of a Consumer Proposal:
It can help you avoid bankruptcy.
You can repay a portion of your debt, not the full amount.
Your creditors cannot pursue legal action against you while the proposal is in effect.
You can make a single monthly payment instead of dealing with multiple creditors.
You can improve your credit score faster compared to a bankruptcy.
How to Qualify for a Consumer Proposal:
You must owe less than $250,000 (excluding mortgage debt).
You must be unable to repay your debts in full.
You must be a resident of Canada.
The Consumer Proposal Process:
Schedule a free consultation with an Insolvency Trustee.
Review your financial situation and determine if a consumer proposal is right for you.
Work with the Insolvency Trustee to prepare a proposal.
Submit the proposal to your creditors.
If the proposal is accepted by a majority of your creditors, you make payments as outlined in the proposal.
Once you have made all the payments, your debts are considered settled, and you are debt-free.
In conclusion, a consumer proposal is an effective debt solution for individuals who are struggling with debt and unable to repay their creditors. It provides a way to repay a portion of your debt, avoid bankruptcy, and get a fresh financial start. If you are struggling with debt, it is essential to seek professional help to determine the best debt solution for you.
