A consumer proposal is an empowering solution that can rescue you from the suffocating grip of debt when it has you feeling helpless. Each passing year, more Canadians just like you, turn to consumer proposals to break free from the chains of overwhelming debt. You are never alone in this struggle!
When it comes to filing a consumer proposal, only a Licensed Insolvency Trustee (LIT) possesses the skill and authority to guide you through the process. While credit counsellors or debt consultants may discuss the option with you, they will ultimately direct you to an LIT if you choose to take this bold step forward.
For over 40 years, Campbell Saunders Ltd has stood as a trusted pillar in assisting the people of British Columbia to conquer their debt challenges. Our unwavering dedication has transformed lives and brought peace to countless individuals. Don't hesitate to reach out to us and embark on a life-changing journey towards financial freedom. Take the first step today by contacting us for a free consultation. Your future awaits!
What is a Consumer Proposal?
A consumer proposal is a debt relief option that may rescue you from debt when you are feeling helpless. This includes credit card debt and payday loans. Every year, Canadians turn to consumer proposals to move away from financial difficulties and toward a debt-free future. You’re not alone.
By filing a consumer proposal, you offer to repay creditors a portion of what you owe. The amount you’ll need to repay depends on your unique financial situation.
The Bankruptcy and Insolvency Act regulates consumer proposals, and the Office of the Superintendent of Bankruptcy oversees them. You must file documents through a Licensed Insolvency Trustee (LIT).
A consumer proposal differs from bankruptcy, although the same legislation covers both. The maximum length for a consumer proposal is 5 years (60 months).
Who can file a Consumer Proposal?
Only a Licensed Insolvency Trustee (LIT) is qualified and authorized to file consumer proposal documents. Credit counsellors and debt consultants can explain the option, but they must refer you to an LIT if you decide to move forward.
At Campbell Saunders Ltd, we've been helping people across British Columbia tackle debt for over 40 years. We are proud to be a trusted resource for those who want to take control of their finances. We are here to support you every step of the way.
Consumer Proposals in British Columbia
Three things determine your proposal payments: your total unsecured debt, your income and expenses, and your assets. To figure out the right amount, we first estimate what your creditors would get if you filed for bankruptcy. This helps determine a fair offer for your proposal.
Once we know that amount, we can create a payment schedule for your consumer proposal. This schedule will be more appealing to creditors than bankruptcy.
This is important because your creditors get to vote on whether to accept the proposal. The majority of creditors, by dollar value of debt owed to them, must vote yes to accept the proposal. The proposal is then legally binding over all your creditors, whether they voted to accept it or not.
What is a Consumer Proposal?
A consumer proposal is, as the name suggests, a proposal to your creditors to pay back a portion of what you owe based on your situation and your ability to pay. It is governed by the Bankruptcy and Insolvency Act, overseen by the Office of the Superintendent of Bankruptcy, and filed and administered by an LIT.
A consumer proposal is not a bankruptcy, though it is covered by the same legislation. The maximum length for a consumer proposal is 5 years (60 months).
The payments you make in a proposal are calculated based on three factors – your total unsecured debt, your income, and your assets. When calculating your payments we first create a hypothetical bankruptcy scenario, and work out what your creditors would receive, if anything, if you decided to file a bankruptcy.
Once we know that amount we can structure your consumer proposal payment schedule to be more attractive to the creditors than the bankruptcy – this is important because your creditors get to vote on whether to accept the proposal. The proposal will be accepted if the majority of creditors, by dollar value of debt owed to them, vote yes. The proposal is then legally binding over all your creditors, whether they voted to accept it or not.
A consumer proposal, like any debt settlement arrangement, will add a negative notation to your credit report. This puts many people off exploring this option, but consider what the impact on your credit will be if you fall or continue to be behind on your payments. Even if your score is great now, ask yourself what that score is doing to improve your life currently? Will any creditor lend you money when they see how much debt you’re carrying? Does your good credit score help you cover your monthly expenses?
Our consultations are free, and there’s no obligation to proceed if you decide that a consumer proposal isn’t the right path for you to take.
Contact us to get more information – you can’t make an informed decision if you haven’t explored all your options!
The Advantages of a Consumer Proposal
Vs Negotiating with Your Creditors Yourself
All creditors are bound by the proposal once it’s accepted.
You will make one fixed monthly payment, making budgeting easier.
Legal action cannot affect you.
Your creditors will stop contacting you.
Vs a Debt Settlement Plan
Once accepted, a consumer proposal is legally binding for all creditors. They can choose to opt out of a debt settlement plan.
A consumer proposal can be, and usually is, for less than the full amount of the debt, whereas a debt settlement plan may reduce or eliminate interest but not reduce the principal amount owed.
A consumer proposal includes CRA debts.
There is a pause on all collection actions. A debt settlement plan only stops garnishments and other legal actions if the creditor agrees.
Vs a Bankruptcy
It is less invasive; we only need proof of your income at the start of the process, not on a monthly basis.
Your assets are not affected, though they may need to be factored in when
calculating your payments.
Once your creditors accept the proposal, the payment will not increase if your income increases.
It affects your credit score less negatively and will leave your credit report sooner.
Your tax refunds are yours to keep. If you win money or receive an unexpected inheritance, the proposal will not affect these.
You can shorten the proposal if you pay it off early. A bankruptcy has a set minimum term based on your situation.
Is a Consumer Proposal right for you? It's important to weigh the pros and cons for your specific situation. Contact us today for a free consultation.
The Advantages of a Consumer Proposal vs Negotiating with Your Creditors Yourself
All creditors are bound by the proposal once it’s accepted.
You will make one fixed monthly payment, making budgeting easier.
You are protected from legal action.
Your creditors will stop contacting you.
The Advantages of a Consumer Proposal vs a Debt Settlement Plan
Once accepted, a consumer proposal is legally binding over all creditors (they can decide to opt out of a debt settlement plan).
A consumer proposal can be, and usually is, for less than the full amount of the debt,
CRA debts are included in a consumer proposal.
There is a stay of proceedings on all collection action – a debt settlement plan only pauses garnishments and other legal action if the creditor agrees to do so.
The Advantages of a Consumer Proposal vs a Bankruptcy
It is less invasive – we only need proof of your income at the start of the process, not on a monthly basis.
Your assets are not affected, though they may need to be factored in when
Once the proposal is accepted, the payment will not increase if your income increases.
It has less of a negative impact on your credit score, and will be removed from your credit report sooner.
Your tax refunds are yours to keep. If you win money or receive an unexpected inheritance, the proposal will not affect these.
You can shorten the proposal if you pay it off sooner (a bankruptcy has a fixed minimum term, which depends on your situation).
The Advantages of a Consumer Proposal vs Negotiating with Your Creditors Yourself
- All creditors are bound by the proposal once it’s accepted.
- You will make one fixed monthly payment, making budgeting easier.
- You are protected from legal action.
- Your creditors will stop contacting you.
The Advantages of a Consumer Proposal vs a Debt Settlement Plan
- Once accepted, a consumer proposal is legally binding over all creditors (they can decide to opt out of a debt settlement plan).
- A consumer proposal can be, and usually is, for less than the full amount of the debt, whereas a debt settlement plan may reduce or eliminate interest but not reduce the principal amount owed.
- CRA debts are included in a consumer proposal.
- There is a stay of proceedings on all collection action – a debt settlement plan only pauses garnishments and other legal action if the creditor agrees to do so.
The Advantages of a Consumer Proposal vs a Bankruptcy
- It is less invasive – we only need proof of your income at the start of the process, not on a monthly basis.
- Your assets are not affected, though they may need to be factored in when calculating your payments.
- Once the proposal is accepted, the payment will not increase if your income increases.
- It has less of a negative impact on your credit score, and will be removed from your credit report sooner.
- Your tax refunds are yours to keep. If you win money or receive an unexpected inheritance, the proposal will not affect these.
- You can shorten the proposal if you pay it off sooner (a bankruptcy has a fixed minimum term, which depends on your situation).
Our Easy Steps to File Your Consumer Proposal
If, after talking with us, you decide that a consumer proposal sounds right for you, the steps will be:
01:
Fill out the application form that we will send you – please ask if you’re unsure about any of the questions.
02:
Gather the supporting documents that we ask for – these will be items like ID, recent tax returns, vehicle registration, income proof, and statements from your creditors. It is our job to verify the information on your application form.
03:
Once we have all the information we need, we’ll prepare the legal documents that you’ll need to sign and book an appointment for you to sign them. This can be in person or by video.
04:
We’ll file the documents with the Office of the Superintendent of Bankruptcy and send notice to all your creditors.
05:
The creditors will have 45 days to vote yes or no to the proposal. Sometimes they may ask for more information, and sometimes they will make a counter-offer. We will keep you informed – if you don’t hear from us within the 45 days, this is good news!
06:
Please let us know if any creditors continue to contact you, or if you remember a creditor who wasn’t included – we can add them as long as the debt is from before the proposal was filed.
07:
Please let us know if any creditors continue to contact you, or if you remember a creditor who wasn’t included – we can add them as long as the debt is from before the proposal was filed.
08:
After your proposal is accepted, your only tasks are to make the payments and attend two financial counselling sessions (in person or by video).
09:
You have the option, if your financial situation allows, of paying off the proposal faster than the monthly payment schedule agreed to.
10:
Once the payments are completed and both counselling sessions have been done, we will issue your Certificate of Full Performance. Congratulations!
What is the Consumer Proposal Process?
Step 1: Fill out the application form that we will send you. Please ask if you’re unsure about any of the questions.
Step 2: Gather the documents we need. These include your ID, recent tax returns, vehicle registration, proof of income, and statements from creditors. It is our job to verify the information on your application form.
Step 3: Once we have all the information, we will prepare the legal documents for you to sign. Then, we will book an appointment for you to sign them. This can be in person or by video.
Step 4: We will file the documents with the Office of the Superintendent of Bankruptcy. We will also notify all your creditors.
Step 5: The creditors will have 45 days to vote yes or no to the proposal. Sometimes they may ask for more information, and sometimes they will make a counter-offer. We will keep you informed. If you don’t hear from us within the 45 days, this is good news!
Step 6: Let us know if creditors continue to contact you. If you remember a creditor who was not included, we can add them. This is possible if the debt is from before the proposal was filed.
Step 7: After your proposal is accepted, you only need to make payments. You also have to attend two financial credit counseling sessions. You can do these in person, by phone or by video.
Step 8: You can pay off the proposal faster than the agreed monthly payment schedule if your finances allow.
Step 9: Once you finish the payments and complete both counselling sessions, we will give you your Certificate of Full Performance. Congratulations!
01: Fill out the application form that we will send you – please ask if you’re unsure about any of the questions.
02: Gather the supporting documents that we ask for – these will be items like ID, recent tax returns, vehicle registration, income proof, and statements from your creditors. It is our job to verify the information on your application form.
03: Once we have all the information we need, we’ll prepare the legal documents that you’ll need to sign and book an appointment for you to sign them. This can be in person or by video.
04: We’ll file the documents with the Office of the Superintendent of Bankruptcy and send notice to all your creditors.
05: The creditors will have 45 days to vote yes or no to the proposal. Sometimes they may ask for more information, and sometimes they will make a counter-offer. We will keep you informed – if you don’t hear from us within the 45 days, this is good news!
06: Please let us know if any creditors continue to contact you, or if you remember a creditor who wasn’t included – we can add them as long as the debt is from before the proposal was filed.
07: Please let us know if any creditors continue to contact you, or if you remember a creditor who wasn’t included – we can add them as long as the debt is from before the proposal was filed.
08: After your proposal is accepted, your only tasks are to make the payments and attend two financial counselling sessions (in person or by video).
09: You have the option, if your financial situation allows, of paying off the proposal faster than the monthly payment schedule agreed to.
10: Once the payments are completed and both counselling sessions have been done, we will issue your Certificate of Full Performance. Congratulations!
Contact us to discuss what a consumer proposal would look like for you. An LIT has a duty to help you explore all of your options, even the ones we don’t provide. We ensure that you are knowledgeable, comfortable and ready to proceed – there will be no high pressure sales tactics, just information and support.
Consumer Proposal FAQ’s
If you are having trouble with your proposal payments, please contact us immediately. If you fall three payments behind the payment schedule, you will default on your proposal and it will be annulled. Your creditors are able to resume collection attempts and legal action.
It is possible to revive a proposal after it has been deemed annulled, if you contact us quickly and can catch up some or all of the missed payments. Please contact us to talk about your options.
In short, yes. If you have assets that would be sold in a bankruptcy, their value will be considered. This value, along with other factors, will help calculate your Consumer Proposal payments. However, your actual assets will not be affected. Some people choose to use assets, such as a TFSA, to make a lump sum proposal payment but this is not required.
If your assets are secured (ie. You have a car loan or a mortgage), you will need to continue making the payments as usual if you want to keep the assets. If your car loan has become unaffordable and you wish to return the vehicle, we can discuss the best way to do this.
In a Consumer Proposal, you can keep a credit card with a zero balance and a low limit, though if you struggle to limit your credit purchases, this may not be a wise step towards a financial fresh start. Please talk to us about this if it matters to you. During the Consumer Proposal, you can get a secured credit card. You can also use a prepaid credit card as another option.
Yes, this is a legal requirement for all consumer proposals and personal bankruptcies filed in Canada. The LIT cannot give you your Certificate of Full Performance until both sessions are finished.
The sessions usually last about 30 minutes. They can be done by video, phone, or in person. The topics include budgeting and credit rebuilding.
