For three years after your final payment, a note will appear on your credit report indicating that you entered into an arrangement to settle your debts. This may make it more difficult to secure new loans, credit cards, and other forms of financing. It may cause lenders to require a co-signer to issue new debt or mean you will be charged higher interest rates if you do get approved. As part of the Consumer Proposal, you are required to attend two...

A Consumer Proposal can be an excellent option to eliminate your unsecured debt while protecting certain assets you may otherwise have to give up in a Bankruptcy. It will not impact your secured creditors, and you can generally choose which property to keep and which (if any) to sell to fund your Consumer Proposal. Home (or other real property) Vehicles Personal possessions Investments and savings Tax returns and government...

At the time of filing a proposal you will generally be required to turn over all your credit cards to your Licensed Insolvency Trustee. You may not be able to obtain a new credit card until after your proposal term is complete. However, you can usually continue to use or obtain a prepaid or secured credit card during your proposal.

If you are insolvent, you may be able to file a Consumer Proposal. However, in order to file a Consumer Proposal your total debts, excluding the mortgage on your principal residence, must not exceed $250,000 as outlined by the Bankruptcy and Insolvency Act. For more details, visit our Are You Eligible for a Consumer Proposal page.

A Consumer Proposal allows you to make arrangements to pay all, or part, of your unsecured debt in monthly payments over a specified period of time. It also allows you to change the payment arrangement with your creditors by extending the timeframe, eliminating the interest or reducing the total amount to be paid.

When a Licensed Insolvency Trustee drafts the proposal to your unsecured creditors for you, it must offer your unsecured creditors more money than they would receive if you were to file for bankruptcy. In completing a financial assessment, your Licensed Insolvency Trustee will be able to determine the amount of money you can afford each month to make payments under your proposal to your unsecured creditors.

Your spouse will not be affected by you filing a Consumer Proposal. If there are joint assets or joint debt, it may be appropriate to file a joint proposal as the non-filing spouse will still be liable for joint debt.

The federal government provides guidelines to Licensed Insolvency Trustees that enables them to calculate your surplus income. That amount depends on the number of members in your family and your total family income. If you do not have surplus income under these guidelines, it is unlikely you will be able to submit a proposal that your creditors will approve.

When you file a proposal, unsecured creditors deal directly with your Licensed Insolvency Trustee. Unsecured creditors must stop contacting you directly. If an unsecured creditor persists in contacting you, notify your Licensed Insolvency Trustee immediately.

When your total debts (excluding the mortgage on your principal residence) exceeds $250,000 you will not be eligible to file a Consumer Proposal. However, you would be able to file a Division I Proposal. Just like a Consumer Proposal, you will be making a formal offer to creditors to settle your unsecured debt. Upon filing a Division I Proposal, your Licensed Insolvency Trustee will call a First Meeting of Creditors (FMC) within 21 days. At that...