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Finance 101: How A Consumer Proposal Works (A step-by-step guide)

A man considering contacting a Licensed Insolvency Trustee to discuss filing a Consumer Proposal

Welcome to our overview of filing a consumer proposal in Canada. Today we are going to walk you through the steps required to prepare and file a Consumer Proposal.

The entire concept of pulling together your financial information, meeting with a Trustee and waiting for the voting process to be completed may seem overwhelming at first but rest assured - it's worth it! And when explained properly it's actually a fairly straightforward process.

Disclaimer: I personally helped clients file more than two thousand consumer proposals during my 20 years working for a Trustee firm as a Debt Solutions Manager. So I feel comfortable explaining the process to you.

A Step-By-Step Guide to Proposals

Here's a quick rundown of the typical steps involved:

Step 1: Get an assessment of your financial situation from a Licensed Insolvency Trustee (LIT). This will help determine if a Consumer Proposal is the best option for you. See the comments section below the blog text for a short list of reputable Trustee firms I feel comfortable recommending to you (we do not receive any remuneration for listing those Trustees here).

Step 2: Reach out to any of the Trustees listed and work with them to create a viable Proposal - either by video call or in-person. You will need to provide information to them outlining your list of debts, proof of all assets, proof of household income, and a breakdown of your household expenses.

Step 3: The LIT will take all of your information and incorporate it into a proposal they feel will be accepted by the majority of your creditors. You will be offering a settlement of between 15% and 30% but the amount offered will normally need to be slightly more than what you'd pay if you had filed a bankruptcy.

Step 4: As soon as your proposal is filed with the OSB (Office of the Superintendent of Bankruptcy), all further interest and other charges cease on all debts. There is then a 45-day voting period that takes place.

Be aware: You are under protection from your creditors from the moment the proposal is filed with the OSB and sent out to your creditors. It's like a giant wall of legal protection between you and your creditors.

That "wall" of legislation means collection calls should stop, though it could take a few weeks for all of your creditors to cease collection or legal action. So be patient with them as they sort through the paperwork and update their systems.

Step 5: Congratulations! Your proposal has been accepted by the majority of your creditors at the 45-day mark and 15 days later the court approves it.

Step 6: You now have just TWO responsibilities: You must make a monthly payment to the LIT (and not fall behind three payments during the proposal term). And secondly you will have to attend two 30-minute mandatory counselling sessions, where financial planning and credit rebuilding are discussed with you.

During the 5-year proposal process your LIT will collect and then distribute the funds you pay into your proposal to your creditors over time. And, yes, you can pay down your proposal faster if you're able to.

Step 7: Upon the successful completion of your proposal payments and counselling sessions you will be legally released from your outstanding debts and free to start fresh. You will receive a Certificate of Completion from the LIT.

A Powerful Yet Simple Way To Rid Yourself of Debt

See? Not so bad! Of course, there are additional details involved, but this gives you the basics of what the process entails.

I strongly recommend you reach out to a Licensed Insolvency Trustee to guide you every step of the way and ensure that you fully understand your options and responsibilities. They will help guide you through the Proposal process and ease your debt pressures.

See below this blog for a list of Trustees I feel comfortable referring you to. This list is by no means complete. If you need more names, the OSB can provide you with a complete list.

And good luck! Freedom from debt is a wonderful feeling. Your hard work has paid off!




Phone: 289-807-4999



Phone: 416-224-4350


Phone: 905-766-1300



Phone: 416-226-4293



Phone: 416-246-7771



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