A Consumer Proposal is an offer you can make to settle your debt with creditors by repayment in full, or in part, over a period of time. Although part of the Bankruptcy and Insolvency Act (“BIA”), Consumer Proposals are distinctly different than bankruptcy. An individual who has settled with creditors with a Consumer Proposal will have their credit rating less severely affected than with bankruptcy, and Consumer Proposals must offer creditors more than what they would receive in bankruptcy. Most collection action is suspended after a consumer proposal is filed including income tax debt and garnishees.
How does a Consumer Proposal work?
Consultation and evaluation
First, you’ll meet with us for a free initial consultation to determine whether a proposal would fit your situation. A thorough detailed analysis of your financial situation is required to properly evaluate if a consumer proposal is suitable. This would include reviewing type and amount of debt, monthly income and living expenses, number of people in the household, age, and desire to repay.
Preparing and presenting the Consumer Proposal
If we feel this service would work for your situation, then we’ll determine the type of consumer proposal to file; either a Division One proposal for complicated situations or large amounts of debt, or a basic Consumer Proposal for lesser amounts of debt. Next, the proposal will be structured to find a balance that will work as well as possible for both you and your creditors. We’ll do our best to allow some financial breathing room at the end of each month or during off season work periods, while proposing a repayment schedule that will be acceptable to your creditors, who will generally react favorably as Consumer Proposals provide for a greater recovery than bankruptcy.
Once the proposal has been completed, our office will contact your creditors, at which time they must stop collection action.
Contact us today to schedule a free initial consultation.