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Consumer Proposals

The decision to talk to a Trustee is a scary proposition that is not often taken lightly.  It is important to understand that Trustees not only administer bankruptcies, but also provide other services, including the administration of Consumer Proposals.

What is a Consumer Proposal?

A Consumer Proposal is a legal process available to Canadians through the Bankruptcy and Insolvency Act.  A Proposal provides an alternative to Bankruptcy and other options.  It  allows a debtor to make an offer to creditors to pay all or part of their outstanding debt over a specific period of time.  Once a Proposal is accepted by the creditors, it becomes a binding legal agreement.

What are the advantages of a Proposal?

  • bankruptcy can be avoided, but a Proposal is administered under the Bankruptcy and Insolvency Act and therefore provides the same protection from harassment and collection activity as does bankruptcy;
  • creditors receive more than they would in a bankruptcy, but a Proposal typically costs less than repaying creditors via a Debt Counselling service or through debt consolidation;
  • certain assets may have to be disposed of in a bankruptcy.  However, in a Proposal, control over all assets is retained by the debtor.  Of course, the terms of the Proposal must take into account the value of the asset(s) that would otherwise be available to the creditors in a Bankruptcy.