A consumer proposal is an official procedure governed by the Bankruptcy and Insolvency Act of Canada, exclusively available to individuals whose total debts do not exceed $250,000 excluding debts secured by their principal residence.
There are many advantages to filing a consumer proposal. First, it allows you to retain your assets, as well as dispose of certain assets as you wish. Secondly, the assigned credit is an R8, unlike an R9 as would be the case in a bankruptcy.
Over our 2o years of experience, we have found that a consumer proposal makes it easier to rebuild credit as opposed to trying to do so after declaring bankruptcy. It is important to note that a consumer proposal will not generate any interest charges and the payments will remain the same for the duration of the proposal.
The aforementioned payments will be determined by the Licensed Insolvency Trustee and yourself based on your income and financial responsibilities. This is where the years of experience with consumer proposals become a strong asset.
The payments will be made directly to the Licensed Insolvency Trustee, who will then distribute it in accordance with the terms of the consumer proposal and legal obligations. The consumer proposal is a simplified process compared to a Division 1 Proposal (see the following section).