If you have accumulated too much debt or you have lost your employment and income and cannot manage the payments one solution that may be available to you is a consumer proposal.
By filing a consumer proposal with creditors, which is a process that is administered by a trustee in bankruptcy under the Bankruptcy and Insolvency Act, you will be granted a period of time to pay debts.
In a consumer proposal, you make payments to the trustee and the trustee distributes the funds to the creditors. The arrangements may include lump sum payments and monthly payments for a period up to 5 years. After the required payments have been made, the trustee will issue a certificate to you that states that you have satisfied the conditions of the proposal.
There are a number of advantages to filing a consumer proposal as follow:
- Creditors will be required to cease collection calls, legal actions and income garnishments
- You can arrange monthly payments to suit your ability to pay
- Interest ceases to accrue on your debts
- You are permitted to keep assets that may be otherwise available to creditors in a bankruptcy
- A consumer proposal remains on your credit record for 3 years after you have completed the repayment as compared to 6 years for a bankruptcy
- Creditors usually receive more toward repayment of debt in a consumer proposal than they would in a bankruptcy proceeding, so they tend to favour proposals