Consumer Proposal Process
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To file a consumer proposal in Canada, you need to visit a Licensed Insolvency Trustee (LIT). While many debt firms promote various ‘debt plans’, an LIT is the only debt professional licensed by the government to file a consumer proposal on your behalf. BDO has Licensed Insolvency Trustees in more than 100 offices across Canada who will take the time to explain every debt relief option available and help guide you through the process of a consumer proposal, if you determine that a consumer proposal is best suited to your needs. Here are the steps involved in filing a consumer proposal:
Your initial consultation at BDO comes with no cost and with no other obligations. A licensed debt help professional will listen carefully as you explain your financial situation, including how much you earn, what you own, your monthly expenses and how much debt you’re carrying.
A Licensed Insolvency Trustee will discuss all your available options to help you choose the best solution for your particular needs. At this point, you may determine that filing a consumer proposal is the most suitable option for you and your family.
If you choose to file a consumer proposal, your LIT will help you prepare a proposal to your creditors. The proposal will document the amount of debt you will repay, how much you will pay each month and how many months you will be making payments.
Your LIT will file your consumer proposal with the court and send a notice to all of your creditors. Your creditors have 45 days to consider the proposal, during which time you do not have to make any payments, will not have interest accumulate on your debts, and will be protected from any legal action against you, such as a wage garnishment.
A meeting of creditors is not mandatory for a consumer proposal, but a creditor who holds at least 25 per cent of your debt is allowed to request a meeting, to be held within 21 days. If a meeting of creditors is called, your creditors will vote to accept, modify or refuse the proposal. Creditors’ votes are weighted based on how much of your debt they own. Your LIT will manage all of this on your behalf and explain every step to you along the way.
Once a 51 per cent majority of your creditors accept the consumer proposal (or if no objection is received within 15 days), it will be approved by the court and will be legally binding upon all of your creditors. Once the proposal is approved, you would start making your monthly payments.
From this point, you will make one equal monthly payment to your LIT over the length of time determined in the proposal (no more than five years). You will not have to pay any additional fees or service charges, unlike many other ‘debt plans’ you might have heard about.
In order to have your debt discharged by a consumer proposal, you must attend two credit counselling sessions, which will help you with budgeting and managing your finances. Your debt help team at BDO will take care of providing these counselling sessions and ensure that the process is explained to you.
Once you have fulfilled the terms of your consumer proposal and made all your monthly payments, your Licensed Insolvency Trustee will file the necessary paperwork to release you from your debt. Your LIT will then provide you with information and resources to continue to rebuild your credit and plan your financial future. If you have any questions about the consumer proposal process, you can speak with a Licensed Insolvency Trustee from your local BDO office.