Can I file a second Consumer Proposal?

A Consumer Proposal is a process that combines your unsecured debts into one monthly payment, usually at a reduced amount and with no interest. It doesn’t typically include secured debts such as a mortgage or vehicle loan, you can continue making those monthly payments outside the proposal.

It usually involves monthly payments up to a maximum of 60 months or five years, although the terms can be quite flexible to meet your own unique budget. For many people seeking debt relief, a consumer proposal can be a good alternative to bankruptcy. There is a stay of proceedings in effect when the proposal is filed so you have protection from creditors, but the process has fewer duties than bankruptcy and your assets remain under your control.

Does this situation sound familiar?

If you filed a Consumer Proposal in the past and successfully became debt-free, but now find yourself facing new financial difficulties, you don’t have to worry. The good news is that it’s possible to file a second Proposal.

Unlike Bankruptcy, where a second filing results in a longer and more difficult process, including a longer reporting period with credit bureaus of 14 years after discharge, you can file a second Consumer Proposal the same way you filed the first one. Meet with a Licensed Insolvency Trustee (LIT) for an assessment of your financial situation, go through your options, and come up with payment terms that fit your budget and are reasonable for your unsecured creditors.

There are no new or additional costs associated with a second filing. If your creditors accept the proposal and you complete the terms, the impact on your credit score is the same as a first-time filing. Equifax reports that a Consumer Proposal will be removed from your credit report three years after the proposal is completed or six years from the date it was filed, whichever comes first.

You cannot file or have two Consumer Proposals going simultaneously. To file a second Proposal, you must have completed your first Proposal and obtained a Certificate of Full Performance.

A Consumer Proposal will be annulled if you have monthly payment terms and miss three payments. In cases where payments are being made less frequently than monthly (e.g., a lump sum payment), the Proposal is annulled if three months have lapsed from the date on which the payment was due. If your Proposal is annulled, contact your LIT immediately as it may be revived within 30 days. If more than 30 days have passed, a court application is required to have the proposal revived. However, you cannot file a second Proposal to obtain relief from old debts included in the first.

Get professional help

The first step in determining whether another Consumer Proposal is the best choice for you is to meet with one of our LITs to review all of your options. Contact us for a free, no obligation, confidential consultation to discuss your unique situation and find a Life-Changing Debt Solution that best fits your needs.