A Consumer Proposal is Suitable If:

You have debts over $5,000, but not over $250,000 (not including your home mortgage).

  • You’ve got a good job, and can afford to make some payments each month.
  • You just cannot afford to repay everyone in full with interest.
  • You can’t get a debt consolidation loan because your debts are too high, even with your steady job.
  • You don’t want to go bankrupt, because:
    • With your income, you would be subject to surplus income penalties.
    • You don’t want to lose any of your assets, such as a valuable home or car.

Advantages of a Consumer Proposal

For you the consumer: 

You can negotiate to repay only a portion of the debt you owe.

  • Interest stops accumulating at the date you file.
  • All of your unsecured debts are included, except some limited categories (see below). Debts from credit cards, bank loans, payday loans, and income taxes are included.
  • Maximum repayment period is five years.
  • All collection activities by creditors (except for support and alimony) are immediately stopped, including wage garnishment.
  • You don’t lose your house or any other assets.
  • The effect on your credit rating is less severe than a bankruptcy.
  • You meet a portion of your obligations to your creditors.

Why would your creditors accept a consumer proposal where they are getting less than the full amount they are owed? In most cases they don’t want you to go bankrupt. A proposal is better for them because even though they may not get all of their money, they are getting more than they would get in a bankruptcy.

What a Consumer Proposal Won’t Do For You

A consumer proposal will not: 

  • Allow you to pick and choose the debts to be included.
  • Eliminate your support and alimony obligations.
  • Eliminate your student loan obligations.
  • Deal with your secured debts, such as your house mortgage and car loan. Your trustee can advise how to deal with these.