When you choose to file a consumer proposal, a Licensed Insolvency Trustee (LIT) will negotiate with your creditors on your behalf to consolidate and reduce the amount of debt that you need to repay and to establish terms of payment. You will then be responsible for making one equal monthly payment to your LIT, over a period of up to five years. There are no hidden fees or charges—the payment you make each month will go toward paying off your debts.
A consumer proposal typically takes three to five years to pay off all your unsecured debts, and will remain on your credit report for an additional three years after you’ve made your last payment. You will also attend two credit counselling sessions that will give you solutions for rebuilding your credit and avoiding future debt problems. By filing a consumer proposal, you will get immediate protection from your creditors and be on your way to a fresh financial start.
To learn more about consumer proposals, visit the FAQ page
A Licensed Insolvency Trustee will listen carefully as you describe your situation, and explain every option available to you. If you decide that a consumer proposal might be the best solution to help you pay off debt, the LIT will then prepare a proposal to your creditors and present this to them on your behalf.
When an LIT files your consumer proposal, all your creditors will be notified. While they have 45 days to consider the proposal, you do not have to make any debt payments, and will not be charged interest or have your wages garnished during this time. A creditor who owns at least 25 per cent of your debt could request a meeting of all your creditors, although this doesn’t always happen. If a meeting occurs, your creditors will vote on whether to accept, update or refuse your proposal and your LIT will represent you every step of the way.
Once your consumer proposal has been accepted by at least 51 per cent of your creditors (based on the amount of your debt that they own), it will be approved by the court, and you can start making your monthly payments.
It is important that you continue to make all of your monthly payments on time to avoid defaulting on your consumer proposal. Your LIT will work with you throughout the process, providing you with budgeting and financial management strategies that can help you make your scheduled payments. However, it’s worth noting that if you miss three monthly payments, your consumer proposal will be in default.
In addition to making all your monthly payments, you also need to attend two mandatory credit counselling sessions in order to complete your consumer proposal. BDO will take care of providing these sessions, and will answer any questions you might have.
Once you have met these terms and made your last monthly payment, your LIT will file the paperwork to officially release you from your debts. You will also leave with the information you need to rebuild your credit and start living your debt-free future.