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What is a Consumer Proposal

What is a Consumer Proposal?

By Jennifer Virani

We hear this question all the time; what is a consumer proposal, and how will it affect me? 

A consumer proposal is a formal arrangement filed by a licensed insolvency trustee (LIT) under the Bankruptcy and Insolvency Act (BIA).  It is a viable alternative to bankruptcy if your debts do not exceed $250,000 (not including debts secured by their principal residence, like a mortgage). 

The important thing for our clients to know:

  • A consumer proposal is a process that allows you to make an offer to your creditors to repay your debts on new terms.

When the process is fully understood, this gives the power back to the debtor to find a solution that will actually work for them. These terms include:

  • The amount you are offering to repay.
  • The number of payments, typically a monthly payment plan, is offered over the maximum term of 60 months. 

A debtor can, and we strongly believe should, obtain their own advocate and representation through the consumer proposal process. A advocate will support the debtor and ensure the proposal is structured on their terms.  

How to Qualify

Qualifying for a consumer proposal is not the same as qualifying for a loan or credit card, but there are some basic requirements involved:

  • You must owe less than $250,000 in unsecured debt, this does not include your mortgage.
  • You must be insolvent, which means your income cannot accommodate your debts as they become due.
  • You must have a stable source of income to make regular monthly payments under the proposal.
  • You must be a resident of Canada or have property or do business in Canada.

The $250,000 debt limit applies to individual consumer proposals, so joint consumer proposals can still be an option if your debt is above this limit. Joint consumer proposals can be done with individuals you share financial obligations with, such as a spouse, co-signer, or business partner.

Debt is a challenge for everyone to deal with, but that’s where the experts at 4 Pillars can help. Our team is experienced in helping people manage their debt at all different levels, so you can trust we’ll help you find the best solution to your debt problem.

How to Get Started

If you’re interested in paying off your debt and reviewing all the options available, including a consumer proposal, get in touch with a 4 Pillars agent near you. We have offices across the country to help Canadians with their debt, wherever they are. Get the process started today!

Frequently Asked Questions about Consumer Proposals in Canada

How much debt do you need for a consumer proposal?

To qualify for a consumer proposal in Canada, you must have at least $1,000 in unsecured debt. The maximum for an individual to owe in a consumer proposal is $250,000. Anyone with over $250,000 in unsecured debt will need to pursue alternative debt consolidation methods or file for bankruptcy.

Can you sell your home while in consumer proposal?

Yes. There are no restrictions that will stop you from selling your home during a consumer proposal. Any money you receive from selling your home will not impact your consumer proposal terms.

Why would a consumer proposal be rejected?

Our clients don’t usually have their consumer proposals rejected, but it can happen. If it does, it’s probably because the terms of your consumer proposal are too unfavourable for the creditor. The creditors may expect a minimum amount or percentage to be repaid, which your consumer proposal needs to align with for approval.

Do you lose assets in a consumer proposal?

No. You are not required to surrender any assets during your consumer proposal. This means you can keep your car and your home during a consumer proposal, even if you still owe money for them. Ensure you are making regular payments to pay off any debt accrued from your assets.

Jennifer Virani is the local 4 Pillars Debt Consolidator in North Vancouver, contact her for Consumer Proposal help and advice here.


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