What is a Consumer Proposal?

…and is it worth it?


Are you looking for an affordable debt settlement?

Many residents of Edmonton and Alberta are faced with the problem of unmanageable debt. It is important to know that there are multiple solutions. If you are struggling with your debt and are unsure of where to turn, Goth & Company can show you what options are available for your situation. We believe it is important to consider all options when experiencing financial difficulty. The federal government provides a number of programs to help anyone struggling with debt. The two most common are personal bankruptcy or a consumer proposal.   Bankruptcy is often looked at as a last resort. A consumer proposal is a way people can avoid bankruptcy and may be the better option depending on your circumstances. In this article we hope to help answer the questions “What is a consumer proposal?” and “Is a consumer proposal worth it?”.


So What is a Consumer Proposal?

A consumer proposal is a legally binding debt solution that allows you to negotiate with your creditors to pay a portion of the debt with no interest.  It is a legal process that is binding on your creditors and allows you to negotiate. You agree to repay a portion of what you owe, and your creditors agree to forgive the balance. The agreement is case-specific and is meant to offer a more favourable solution for both you and your creditors. If the consumer proposal offers more money to your creditors than they would receive in the event of bankruptcy, most creditors are very open to the idea and very cooperative.  For a consumer proposal to be accepted it has to be approved by creditors representing over half of your unsecured debt. The legislation provides a significant amount of flexibility; it eliminates the rights of your unsecured creditors to charge interest and allows you to negotiate a repayment plan that can often reduce your debts by as much as 80%.  The ends up saving you a considerable amount of money. A consumer proposal also ensures guaranteed creditor protection and extends the time you have to pay what you owe.


Filing a consumer proposal ensures that:

  • Your assets are protected (i.e. home, vehicle, RRSP, tax refunds)
  • Your only repay a portion of what you owe (debts are reduced up to 80%)
  • Your debts are consolidated into one single affordable monthly payment
  • Your creditors cannot garnish your wages and or make collection calls
  • You have up to 5 years to pay your debts, with zero interest

Example 1:

Let’s consider Colin for example. Colin has $35,000 in unsecured debt (i.e. credit card debts, bank loans, and taxes) and only has $500 left each month after normal living costs – he 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. Colin could consider a consumer proposal that proposes to pay his creditors a total of $12,000 over the course of up to five years. He will not be losing interest and only has to make one payment that could be as low as $200.00 per month. That’s a monthly savings of $850!


What debts can be included with a consumer proposal?

  • Credit cards
  • Bank loans
  • Tax debt
  • Payday loans
  • Student loans, in some cases


Any individual with up $250,000 in unsecured debt (not including your principal mortgage) has the potential to qualify. If this sounds like it might help to get your finances back on track the best thing to do is to come in and meet with one of our professionals. At Goth & Company, your first consultation will always be free, there will be no cost or obligation, and we will spend as much time with you as we need to help you understand all of your options and how those options will help impact in you.


Terms of Negotiation

In your initial appointment, we will evaluate your personal finances to determine whether or not a proposal fits your circumstances. The total amount of debts owed, along with your income, assets, and family size are all considered as part of this process. We will work together with you, ensuring that the offer satisfies the creditors and fits into your monthly budget.

Your proposal will be personalized according to:

  • the amount you can afford to pay
  • the amount your creditors would receive in the event of bankruptcy
  • the amount your creditors would expect as a minimum payout

If the numbers appear fair and reasonable for both parties, we will help prepare the necessary documents to file a proposal and do everything we can to help it get approved. Our experienced administrators will negotiate with your creditors on your behalf, and the result will be monthly payments that are considerably lower than what you pay now and the other programs available to deal with this type of debt. In most cases, our clients remaining debts are as low as 20-30% of the original amount owed and a monthly payment that fits into your budget.


Key Points:

Only Licensed Insolvency Trustees can file consumer proposals. A consumer proposal in Alberta is legally binding on all unsecured creditors upon acceptance, including the Canada Revenue Agency.

A consumer proposal is legally binding even if a creditor(s) does not vote in favour of the proposal. What does this mean? You can rest easy knowing that you will not be left with outstanding debt. All your debts are consolidated into an easy monthly payment. A consumer proposal will ensure all your debt is taken care of, so you can breathe a sigh of relief about your financial future.

Getting Approved

For a consumer proposal to be accepted, a formal voting process must take place. Your creditors have 45 days to decide if they accept the terms of the proposal. The final decision is based on a majority vote. So, as long as the majority of your creditors cooperate, the proposal is legally binding on all the creditors involved. In some instances, the Office of the Superintendent of Bankruptcy might counsel the LIT to call a meeting of creditors. In that case, the date meeting date must be set within 21 days of making the request.  If your creditors do not request a meeting within 45 days of filing, by default, the proposal has legally been accepted.

Once accepted:

  • You are responsible for ensuring that all payments are made (monthly, or a lump sum)
  • You are required to attend two sessions of financial counselling

Do 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.

We recommend a Consumer Proposal to anyone who…

  • Wishes to keep their secured assets (i.e. home, vehicle, RRSPs, etc.)
  • Would like to avoid bankruptcy
  • Has debts under $250,000
  • Is required to disclose bankruptcy to their place of employment
  • Would be required to make large payments in the case of bankruptcy

Most of your unsecured debts CAN be eliminated by a consumer proposal! Credit councillors and unlicensed debt consultants cannot legally provide consumer proposal services. These types of debt resolution services can only refer a client to a licensed trustee. With Goth & Company, no referral is required. 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.


Filing a Consumer Proposal in Edmonton & Northern Alberta

Since 1993, Goth & Company has helped thousands of people overcome their debt and get a fresh start. We understand that unexpected financial setbacks can happen and we are here to offer debt solutions that reduce your stress and worry and save you money.

  • We always offer free and confidential consultations
  • We are dedicated to finding the best debt solution fit for you
  • We do not charge additional fees or interest
  • We have six conveniently located offices across Edmonton and Northern Alberta

Talk to a professional!

As a leading Licensed Insolvency Trustee company in Alberta, Goth & Company will make sure you are armed with the information you need to make confident and informed decisions. From your first phone call to us until the day you are debt-free, our team will be right beside you every step of the way! You will always receive prompt service, and our staff will always provide knowledgeable answers to your debt relief questions.

Call 1 (780) 435-5110 to get your questions answered by one of our professionals. We are always ready to assist you with your unique financial circumstances. Finding our office nearest to you is as easy as one click.

We look forward to helping take the first step towards becoming debt-free and gaining your financial freedom!