How do Consumer Proposals Work in BC
Practical Solution for Debt Relief and Financial Freedom
Practical Solution for Debt Relief and Financial Freedom
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If you’re struggling with debt and need a way to take back control, a consumer proposal could be the answer.
Consumer proposals are a legally binding way to settle your debts with creditors while maintaining your assets. Let’s break down exactly how it works and why it’s an effective option for many individuals in BC.
Benefits of a Consumer Proposal
Reduced Debt Load:
Settle for less than what you owe.
One Monthly Payment:
Simplify your finances with one affordable monthly payment.
Stay in Control of Assets:
Keep your home, car, and other significant assets.
Protection from Creditors:
Gain legal protection from collection agencies.
Credit Repair Opportunity:
Start rebuilding your credit through a clear repayment plan.
How a Consumer Proposal Works in BC
Step 1
Initial Consultation
You’ll meet with a Licensed Insolvency Trustee (LIT) to review your financial situation. They’ll look at your debt, income, and expenses to decide if a consumer proposal is right for you.Step 2
Assessment
The LIT creates a detailed analysis of your debts and proposes a repayment plan that works for your budget. This plan ensures creditors receive more than they would in bankruptcy. The goal is to find a repayment amount that is affordable and fair for all parties.Step 3
Proposal Submission
Your LIT will submit the proposal to your creditors. The proposal outlines the repayment terms, including the amount, frequency of payments, and duration. Most proposals are for 5 years, but shorter terms are possible.Step 4
Creditor Review
Creditors vote to approve or reject the proposal. If the majority approve (based on the value of debt owed), the proposal becomes legally binding for all creditors. Don’t worry—your LIT handles communication and negotiation on your behalf.Step 5
Monthly Payments Begin
You’ll make one consolidated monthly payment to your LIT, who distributes it to creditors as agreed in the proposal. This simplicity makes budgeting more manageable and predictable.Step 6
Completion and Discharge
Once you complete the agreed payments, any remaining eligible debt is officially forgiven. Congratulations—you’re debt-free!Consumer Proposal vs. Other Debt Solutions
| Aspect | Consumer Proposal | Bankruptcy | Debt Consolidation |
|---|---|---|---|
| Debt Forgiveness | Forgiveness of up to 70% of debt in most cases | Full forgiveness after administration and payment of a minimal fee (e.g., $1,800) | None; typically requires full repayment plus interest |
| Asset Protection | Yes, assets are protected | Limited; depends on provincial exemptions | No protections; creditors can seize assets |
| Impact on Credit | Minimal to moderate impact, R7 rating | Severe impact, R9 rating | Moderate impact |
| Monthly Payments | Manageable payments within your family budget | Depends on income exceeding guidelines set by Superintendent of Bankruptcy | May be higher to repay creditors quickly |
Clarifying Information:
- Consumer Proposal: Payments are structured to be affordable, reducing debts by up to 70% in most cases - the remainder is forgiven when the proposal is completed. This approach ensures manageable payments while avoiding bankruptcy.
- Bankruptcy: Full debt forgiveness is granted once a discharge from bankruptcy is obtained, after completing your bankruptcy duties including paying any applicable amounts, starting at $1,800 paid in affordable monthly installments.
- Debt Consolidation: Combines debts into one payment for full repayment, typically with interest or reduced interest, over a shorter period of time.
Common Questions about Consumer Proposals
How much does a consumer proposal affect my credit score?
A consumer proposal will impact your credit score but offers a structured plan to rebuild it gradually. Want to repair your credit? Read our step-by-step credit repair guide
What’s the difference between a consumer proposal and bankruptcy?
A consumer proposal allows you to retain your assets and offers more flexible terms than bankruptcy. Read our article Comparing Debt Solutions in Canada for more information.
How long does the process take?
The average duration is 3–5 years, depending on your repayment terms.
Can I pay off my proposal early?
Yes, if you’re able to, you can complete the proposal faster and begin credit repair sooner.
For more details, check out our guide on how to qualify for a consumer proposal.
Not sure how to get started?
Book a free consultation with CSVan today.
"I was overwhelmed with debt until I reached out to CSVan. The consumer proposal allowed me to reduce my debt and regain control over my finances. Now, I’m debt-free and rebuilding my credit!"
Sarah M., Vancouver, BC
"I am incredibly grateful to Campbell, Saunders Ltd., Licensed Insolvency Trustees in Surrey, BC, for their outstanding service in getting my Consumer Proposal approved. From the very beginning, the team displayed exceptional professionalism and efficiency, making the entire process smooth and hassle-free.
Their expertise and deep understanding of the process were evident in how quickly they managed to secure approval for my proposal. Every step was clearly explained, and I felt supported throughout the journey. The communication was prompt, transparent, and thorough, ensuring that I was never left in the dark about the progress.
Campbell, Saunders Ltd. truly went above and beyond to provide a seamless experience. They alleviated the stress and uncertainty that often accompanies financial difficulties, and I cannot thank them enough for their dedication and hard work.
I highly recommend Campbell, Saunders Ltd. to anyone in need of insolvency services. Their commitment to their clients and their remarkable efficiency make them a standout choice for anyone seeking financial relief through a Consumer Proposal."
Kamal Sharma
