You might qualify for a consumer proposal in Canada if you meet the following eligibility requirements:

  • Your total debts are less than £250,000 (excluding your mortgage). If you owe more, you can file a Division I proposal instead.
  • You live in Canada (a permanent resident or under a work permit or another status) or own property in Canada.
  • You are unable to pay your debts as they become due and owe more than your assets are worth (you are insolvent).
  • You can afford to make a monthly repayment towards your debt after essential bills.

A consumer proposal must offer creditors more money than they would receive if you declared bankruptcy.

A Licensed Insolvency Trustee can advise on an amount that creditors will likely accept.

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If I qualify, why should I file a consumer proposal?

By filing a consumer proposal, you can consolidate your debts into one affordable monthly payment and stop all creditor action.

  • Reduce your repayments to an amount that you can afford.
  • Stop creditors pursuing you and freeze interest and charges.
  • Avoid bankruptcy, which can result in higher payments if you have surplus income.
  • A Licensed Insolvency Trustee will deal directly with creditors on your behalf.
  • Protect your assets.

The consumer proposal process is legally binding, so creditors can no longer contact you if you keep up your monthly payments.

You won’t have to deal with your creditors directly. Instead, an administrator called a Licensed Insolvency Trustee submits a proposal offer on your behalf, files your proposal and manages your monthly payments.

If your financial situation changes for the better, your repayment amount will not change. The maximum term for a consumer proposal is sixty months, but you can pay off the consumer proposal at any time once it has been accepted.

See also: Pros and cons of filing a consumer proposal

What types of debt can I include?

A consumer proposal usually includes unsecured debts such as:

  • Credit card debts
  • Personal loans
  • Payday loans
  • Bank overdrafts
  • Utility bills (You can’t include bills for services you are continuing to use)
  • Unsecured lines of credit
  • Income tax debts (unless the CRA registers a lien on your property)
  • Student loan debt if you haven’t been a student for seven years or more
  • Unpaid rent
  • Debts owed to friends and family.

Are there any types of debt I cannot include?

There are debts you cannot include in a consumer proposal, such as:

  • Secured debts such as a mortgage or car loan.
  • Property taxes.
  • Any fine or penalty imposed by a court, such as a parking ticket or fine.
  • Unpaid alimony or child support.
  • Debts obtained by fraud.
  • Debt obtained through false pretence (e.g. lying on a loan application).
  • Student loans if it’s been less than seven years since you were a student.
  • An award by a civil court for damages arising from personal or sexual assault.

Who can file a consumer proposal?

You cannot file a consumer proposal on your own. Instead, it is administered by a Licensed Insolvency Trustee, who submits a consumer proposal on your behalf.

During your consultation, the trustee will determine whether a consumer proposal or another debt relief option is the best way to resolve your debts.

See if you qualify for a consumer proposal

If you struggle to make payments to your unsecured creditors, a consumer proposal might suit you.

To qualify for a consumer proposal, you must live in Canada, have unsecured debts totalling no more than £250,000, and be able to make a repayment towards your debts each month.

A consumer proposal is based on what you can pay, not what you owe. You make one affordable payment, and the remaining balance is forgiven when you’ve finished your payments.

Every year, it helps thousands of people get their finances under control. To find out if a consumer proposal can help you, connect with a Licensed Insolvency Trustee to learn more.

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