What's a consumer proposal?

_{What a consumer proposal is, consumer proposal, Ontario}

A consumer proposal can be your easy route to manage unsecured debts. It’s a deal to pay back less over up to five years, guided by a Licensed Insolvency Trustee (LIT), and lets you keep your assets. The proposal protects you from creditor calls and legal issues, although it remains on your credit report for three years after completion. Trustees are compensated by lenders and creditors, so they don’t represent the interests of Canadians in debt. They may also charge additional fees or bill you twice. Be mindful! We’re here to help via phone, text, or live chat.

Show Table of Contents

_{Consumer proposal: your path to debt relief and peace.}

What A Consumer Proposal Is Question

What’s a consumer proposal? I’ve heard the term “consumer proposal” thrown around, but I’m not sure what it means or how it can help someone like me who’s struggling with debt.

From: Anonymous Question
Location: Markham, Ontario (ON)
Category: consumer proposal

What A Consumer Proposal Is Answer

Think of a consumer proposal as your lifeline to straighten out unsecured debts, a kind of handshake deal between you and your creditors to settle your dues for a bit less than you originally owe, all orchestrated over a relaxed timeline of up to five years. Managed by that trusty Licensed Insolvency Trustee (LIT) waving the magic wand, this proposal allows you to keep cherished assets like your home or car safe while promising those monthly payments won’t have you sweating bullets. It’s a breather from all the stress because it also slaps a stop sign on pesky creditor calls, wage garnishments, and those dreaded legal squabbles. While it won’t vanish without a trace—lingering on your credit report for three years post-completion with some standard fees involved, often around $1,500 plus a cut for the trustee’s work—this is your smooth runway back to financial stability, making those chaotic money matters a whole lot more manageable. Licensed Insolvency Trustees are paid by lenders and creditors, not by Canadians in debt. They may also double bill or charge extra fees. Be cautious! Contact us by phone, text, or live chat if you have questions.

From: Insider Adam

Office of the Superintendent of Bankruptcy (OSB) Answer

A consumer proposal is a formal agreement between an individual and their creditors to settle debts for less than the full amount owed. It allows the debtor to make reduced payments over a specified period, typically up to five years, based on what they can afford. This process is governed by the Bankruptcy and Insolvency Act and specifically outlined in sections relevant to consumer proposals (Part III, sections 50.2 to 50.6).

A consumer proposal can help individuals by providing relief from overwhelming debt, stopping collection actions, and allowing them to avoid bankruptcy, while also helping to maintain their assets. This option is generally available to individuals whose debts fall under $250,000, not including their mortgage on their primary residence.

From: OSB Helper

Related Questions to Consumer Proposal

Here are the top 5 most frequently asked questions related to consumer proposals, based on common concerns and online search trends:

1. What is a consumer proposal?

A consumer proposal is a formal agreement between a consumer and their creditors to settle debts without filing for bankruptcy, where the consumer repays a portion of their debts over a maximum of five years[1][3][5].

2. How does a consumer proposal affect my credit score?

A consumer proposal negatively impacts your credit score, with the record staying on your credit report for up to three years after completion[2][3][5].

3. What types of debts are covered under a consumer proposal?

A consumer proposal mainly covers unsecured debts such as credit cards, tax debt, and personal loans, but does not cover secured debts like mortgages or car loans, or student loans less than 7 years old[2][3][5].

4. Can I keep my assets in a consumer proposal?

Yes, in a consumer proposal, you can keep your assets, including your home, vehicles, investments, and personal belongings, as long as you maintain your mortgage payments[1][3][5].

5. How long does a consumer proposal last?

A consumer proposal typically lasts up to five years, during which you make fixed monthly payments, with the option to pay off the debt early[1][3][5].

If you have a question about debt see our debt questions or ask your own debt related question.

References

_{Table of article references}