6 Steps to Filing a Consumer Proposal

in Canada

What is a Consumer Proposal?

A consumer proposal is an offer made by a bankruptcy trustee on behalf of debtor to a creditor proposing lower monthly

payments or a reduction in overall amount owed.

A proposal must be completed within five years.

Who Can File a Consumer Proposal?

A consumer proposal can only be facilitated by a licensed bankruptcy trustee.

Step One: Assessment of your Finances

It’s critical to disclose all of your assets (what you own) and liabilities (what you owe) to the trustee.

Based on your assessment, your trustee will submit the proposal to your creditors, including a report about your personal circumstances and the reasons

for your financial difficulties.

Step Two: Determining EligibilityTo Qualify for a Consumer Proposal You must:

•Be filing on your own behalf (corporations are not eligible to file for consumer proposals)

•Be insolvent

•Have total debts less than $250,000 (excluding the mortgage on your primary residence).

•Have a stable source of income or be able to fulfill a lump sum proposal

•Have no prior proposal proceedings still open

Step Three: Drafting and Filing the Proposal

Your trustee will draft the proposal based on your financial assessment and file the completed

proposal with the Office of the Superintendent of Bankruptcy (OSB).

Once your proposal is filed, you will stop making payments directly to your unsecured creditors

and any legal collection activity against you will cease.

Step Four: Creditor Vote

Creditors are given 45 days to accept the proposal or reject it.

If a majority of creditors vote to accept and the proposal is subsequently approved by the Court, it becomes binding on the debtor and all unsecured creditors in the

proposal.

Step Five: Fulfilling the Terms of Your Proposal

• You are required to adhere to the repayment terms and any other conditions in the proposal

• You must attend two financial counselling sessions

• You must complete the proposal

Step Six: Completing Your Agreement

If you meet the conditions of the proposal in full, you will be legally

released from the debts included in the proposal.

Note: Section 178 debts will not survive a proposal.

The Benefits of a Consumer Proposal

• Most legal collection activity ceases immediately

• Interest stops accumulating from the date you file

• Creditors can no longer contact you for payment

• You can retain all of your assets

• You are only required to repay a portion of your unsecured debt

For additional information visit

www.PersonalBankruptcyCanada.ca