Consumer Proposal

To find out if a consumer proposal (or a different option) is the right choice for you, set up a meeting with an LIT to discuss your personal circumstances. The LIT will evaluate your financial situation and explain the pros and cons of the various options that could help you solve your financial problems. If you decide to submit a consumer proposal, the LIT will work with you to develop a proposal that works for both you and your creditors.

1.  The LIT will file the proposal with the Office of the Superintendent of Bankruptcy (OSB). Once your proposal is filed, you stop making payments directly to your unsecured creditors. In addition, if your creditors are collecting your salary (garnisheeing your wages) or have filed lawsuits against you, these actions are stopped.
2. The LIT will submit the proposal to your creditors. The proposal will include a report on your personal situation and the causes of your financial difficulties.
3. Creditors then have 45 days to either accept or reject the proposal. They can also do this either prior to or at the meeting of creditors, if one is held.

The number of votes corresponds to the total dollar value of the proven claims. The vote is decided by a simple majority of this dollar value (i.e., 50% plus 1). For example, if the proven claims total $150,000, and if the creditors who vote to accept the proposal are together claiming at least $75,001, then the proposal will be deemed accepted and all other unsecured creditors must accept it as well.

If your proposal is accepted, the OSB (or any other interested party) has 15 days to ask the LIT to apply to the court to have the proposal reviewed. If no such request is made, the proposal will be deemed to have been approved by the court.

You will:

• be responsible for paying either a lump sum or periodic payments to the LIT;
• be required to adhere to any other conditions in the proposal;
• retain your assets (provided you make your payments to your secured creditors); and
• be required to attend two financial counselling sessions.

 You can:

• make changes to the proposal and resubmit it;
• consider other options for solving your financial problems; or
• declare bankruptcy.

If you meet the conditions in full, you will be legally released from the debts included in the proposal.

However, if you are making monthly payments and miss three payments, or if your payment schedule is less frequent but your last payment is more than three months past due, the proposal will be deemed annulled. This means your creditors will be able take action to collect the money you owe them, unless the court has ordered otherwise, or unless an amendment to the consumer proposal has been filed. A consumer proposal that has been deemed annulled may be revived under certain conditions.