In Edmonton & Northern Alberta
Filing a Consumer Proposal
A consumer proposal is a court-sanctioned process that allows you to negotiate a settlement with your unsecured creditors. It is designed to allow those who cannot afford to pay their debts in full a way to avoid bankruptcy.
For example, if you have $35,000 in unsecured debt (i.e. credit card debts, bank loans, and taxes) and only have $500.00 left each month after your normal living costs, you cannot afford to pay the $1,050 per month minimum payments that would be required. This is the type of situation that a proposal was designed to help with. You could consider making a consumer proposal where you propose to pay the creditors a total of $15,000 over the course of up to a five-year term. In the proposal, you will no interest (this has been frozen by the court), and you end up with one a payment that could be as low as $250.00 per month.
How do You File a Consumer Proposal?
Only a Licensed Insolvency Trustee can file a consumer proposal for you. The first step would be meeting with a proposal administrator at your Trustee’s office. The administrator will assist you in assessing your situation and determining whether or not a proposal will work.
After a detailed review of your finances (i.e. who you owe money to, how much you owe, your monthly cash flow, etc.), the administrator will help you determine what type of offer would be required to satisfy the creditors and whether or not that will fit into your monthly budget. At the same time, the trustee will explain how the proposal process works.
There are fundamental concepts that are essential for you to be familiar with (i.e. voting, the stay of proceedings, etc.). If the numbers appear reasonable for both you and your creditors, the Trustee will help to prepare the documents necessary to file a consumer proposal to creditors.
Who Decides if a Proposal is Acceptable?
For a proposal to be accepted we need to have a majority of the creditors, so there is a formal voting process that takes place. Your unsecured creditors will have 45 days to determine if the proposal is acceptable and as long as we have a majority of the creditors cooperating with the proposal, regardless of which creditors we are dealing with, the consumer proposal is automatically binding on all the creditors involved.
Once the proposal has been accepted by the creditors it is also approved by the court, but this is largely a rubber stamp, as long as the creditors are happy and the proposal has been written properly based on valid information, the court is happy to ratify the creditors’ decision.
Learn how a consumer proposal could work for you!
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Recent Posts About Consumer Proposals
We continually publish new content based on questions and feedback from our clients and visitors.
A Consumer Proposal or Personal Bankruptcy Will Clear Up My Credit Report Myth or Fact? Several times a week I get calls from individuals (debtors) who believe that if they go through a consumer proposal or personal bankruptcy their debts will be removed from their...
How Often Do Consumer Proposals Get Rejected? And What Happens If They Are? Consumer Proposals get accepted in our office “eventually” at a rate of 95% or better. This means a combination of acceptance by creditors votes by the initial vote 45 days from the...
How Often Do Consumer Proposals Get Accepted? What Happens To Make Them Get Accepted? A consumer proposal offered to creditors has to be approved by a creditors' vote. A vote needs to achieve a majority in value (more than 50%) of creditors voting in favour of the...
Do I Have To Disclose All Debts In A Consumer Proposal Or Bankruptcy? Why It Matters When a consumer proposal or bankruptcy starts there is immediate protection from the collection action of all unsecured creditors against the debtor. To get this protection, certain...
Can I Make A Consumer Proposal To My Creditors By Myself? No, you can’t. But let’s make sure we are both talking about the same thing. If you ask a Licensed Insolvency Trustee (“LIT”) what a consumer proposal is, the LIT will tell you that it is a specific process...
Frequently Asked Questions
Below are commonly asked questions about consumer proposals in Edmonton and in Alberta.
What debts can be included with a consumer proposal?
- Credit cards
- Bank loans
- Tax debt
- Payday loans
- Student loans, in some cases
How do I know if I qualify?
A Licensed Insolvency Trustee can assess whether if you fall under the Federal requirements that must be met to file a consumer proposal.
- Are you able to pay a portion of your debts?
- Is the value of what you own greater than your debts?
- Are your debts less than $250,000?
- Are you able to afford monthly and lump sum payment(s)?
If so, a consumer proposal may be the most cost-effective debt solution for you.
Who can file a consumer proposal?
By law, consumer proposals must be filed by a Licensed Insolvency Trustee (LIT). Our knowledgeable administrating LITs will get all your questions answered and can start your proposal as early as your first appointment if that is what you want. We are here to answer all of your questions and walk you confidently through every step of the process.