Consumer Proposal

What is a Consumer Proposal?

Consumer ProposalAccording to Federal Government statistics making a consumer proposal, sometimes referred to as debt settlement proposals,  or “offer” to settle with creditors is a growing trend across Canada.

  • Although part of the Bankruptcy and Insolvency Act (“BIA”), Consumer Proposals are distinctly different than bankruptcy. Some of the main differences are that a person’s assets do not vest with a trustee and a person’s credit history is less severely impacted.
  • Consumer Proposals offer a means to repay creditors in full, or in part, over a period of time.
  • Consumer Proposals must offer creditors more than what they would receive in bankruptcy.
  • Most collection action is suspended after a debt settlement proposal is filed including income tax debt and garnishees.
  • There are two types of debt settlement proposals that can be filed:

Division 1 proposal for large amounts of debt or complicated situation or alternatively; Consumer proposals for a lesser amount of debts.

  • One can be very creative in structuring a debt settlement proposal in order to allow some financial breathing room at the end of each month or during off season work periods such as fire shutdown.
  • Creditors generally react favourably to Proposals because a Proposal will provide for a greater recovery than bankruptcy.
  • A thorough detailed analysis of your financial situation is required to properly evaluate if a debt settlement 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.

Please do not hesitate to contact us for further information or a free initial consultation to determine whether a proposal would fit your situation.

Get a Free Evaluation!

Toll free in BC:

Bankruptcy Application