Consumer proposals in Canada
A consumer proposal can help you pay off your debts by negotiating a manageable repayment plan with your creditors. Payments are made through a trustee or proposal administrator who will redistribute a portion of your monthly payments to each of the creditors. There are several key benefits to choosing a consumer proposal to pay off your debt:
- You can negotiate with creditors to only pay a part of your debt instead of the full amount you owe
- Interest charges are stopped
- You will be debt free in five years or less (proposal length can vary)
- A proposal is legally binding
- Harassing calls from creditors and wage garnishments will stop
- Consumer proposals include many types of unsecured debt, i.e. money owed without collateral, such as credit cards, lines of credit, bank loans, and taxes
- You will be able to keep your assets (car, home, etc.)
- No additional fees are required beyond your agreed-upon monthly payment
Consumer proposals are a win-win solution for you and your creditors. While your creditors can recover some, if not all, of the money that is owed to them, you can simultaneously eliminate your debt. As long as the consumer proposal allows creditors to recover more money than other debt solutions, creditors will most likely choose to accept the proposal.
No hidden cost to filing a proposal
We recognize that the cost of professional help can be worrisome if you are struggling to pay bills and day-to-day expenses. When you make a proposal to creditors, you only pay the consolidated monthly amount that they agreed to and for which you budgeted. There are no additional fees.
Qualifying for a consumer proposal
Consumer proposals are a good debt solution if you:
- Are carrying debt between $5,000 to $250,000
- Have assets (car, house, RRSP, etc.) that you do not want to give up
- Want relief from accumulating interest
- Want to repay your debts but just need more time and/or a more reasonable repayment plan
- Have a spouse (it may even be possible for you and your spouse to file a consumer proposal together, which would increase the amount owing to $500,000)
Check out an an example of a consumer proposal here.
Steps in filing a consumer proposal
The thought of making a consumer proposal can be intimidating with all of the legal terminology and steps involved in the consumer proposal process. Your trustee will guide you through the process and take care of many of the steps on your behalf.
A consumer proposal is just one of the debt help solutions offered by BDO. You can also speak to us about other debt management options, including financial counselling or bankruptcy filing.
For complete information, and to answer your questions thoroughly, we encourage you to contact your local BDO office or request a call.