Consumer Proposals in Ontario & Alberta

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What is a consumer proposal?

If you are in need of an alternative to declaring personal bankruptcy you can file a consumer proposal.

A consumer proposal is an agreement with creditors, outlining the percentage of the debt you owe them and allowing you to extend the amount of time you can pay back this debt.

The payments are made through the Licensed Insolvency Trust (LIT) which will pay the creditors on your behalf.

A consumer proposal as an alternative to bankruptcy is one of the most efficient and safe ways to consolidate debt.

Is a consumer proposal worth it?

There are many benefits of submitting a consumer proposal:


1. Avoid bankruptcy

Consumer proposals can offer a safe way to avoid filing for bankruptcy. In most cases, creditors will accept your consumer proposal if they are paid back more than they would expect to receive through a bankruptcy.
Manageable payments and reduce debt

Through a consumer proposal, you agree to a manageable payment package and can dramatically reduce how much of the actual debt you pay back – sometimes by up to 70%.


2. Fixed payments

While through a bankruptcy, the more you earn the more you have to pay back, a consumer proposal involves fixed-price repayments, so you pay back the same amount each month regardless of whether your earning potential increases.


3. Maintain ownership of all your assets

Unlike with a bankruptcy, your assets are protected, including investments and equity in your home. This is one of the biggest benefits of a consumer proposal.

Consumer Proposals

What debts does a consumer proposal help you get rid of?

A consumer proposal can be incredibly useful because it can help to eliminate a large portion of your unsecured debts. These debts may include:

  • Credit card
  • Tax debts
  • Student loans
  • Bank loans

Consumer proposals only deal with unsecured creditors, meaning all secured loans must be handled separately. This means it does not affect debts such as your mortgage on your place of residence or your car loan.

Consumer Proposals

Take control of your debt today

Are you eligible for a consumer proposal?

In Canada, consumer proposals are federally regulated. In order to be eligible, you must meet the following criteria:

  • You are able to pay a percentage of your debt.
  • You’re a consumer with less than $250,000 of unsecured debt.
  • You are a Canadian citizen or own property in Canada.
  • Your debts are greater than any asset that you own.

Harris & Partners Inc. can help you file a Division 1 proposal. Don’t wait! There is no reason to lose your house or car unless you wish to give them up. As an LIT, we can help you formulate an agreement that works for both you and creditors.

Consumer Proposals

How to file a consumer proposal

Here are the steps to filing a consumer proposal:

Meet with one of our Licensed Insolvency Trustees (previously known as Trustees in Bankruptcy), to determine your financial position.

If it is decided that filing a consumer proposal is appropriate for you and conditions are met; a consumer proposal is filed with your signature.

After, your consumer proposal will be reviewed by your creditors. They will decide whether they will approve it.

If accepted, they’ll send it back for you to review. If denied, then you can consider making changes to the proposal and resubmitting it, determine another way to solve your financial issues, or declare bankruptcy.

Once the terms of the proposal are filled and all payments are made, the remaining debt from the proposal is completely discharged.

Frequently asked questions

How long does a consumer proposal last for?

If you’re wondering how long your consumer proposal will last, it typically cannot last for longer than five years. Yet, it’s important to keep in mind that the exact length depends on the type of proposal that you submit.

If you choose to, you are able to pay off your consumer proposal early. It will also be a relief to learn that you can pay it off early without the risk of penalties.

Does a consumer proposal affect your credit rating?

A consumer proposal will affect your credit rating in the short-term but in the long-term (after completing the consumer proposal from start to finish) you may see an improved credit score rating. If you are approved for a consumer proposal, it will stay on your credit report 3 years after you’ve paid off your debts or 6 years from the day the consumer proposal was filed (whichever comes first).

Getting out of debt will make you feel free and will help you start your journey of having a better credit rating overall.

Can you keep a credit card with a consumer proposal?

In the vast majority of cases, you can’t keep a credit card when you file a consumer proposal. It is possible to apply for a new credit card during your consumer proposal, but it’s advised you do so with caution and maintain healthy credit card habits, such as paying bills on time and making regular payments to rebuild your credit.

How long after consumer proposal can I get a mortgage?

This can vary according to your own individual circumstances, the state of your credit and the lender you use.

Often a lender won’t consider a new mortgage until your credit score falls within a healthy range. There are alternative lenders who will be more willing to consider a new mortgage and there is nothing to stop you from applying for one.

Can a consumer proposal be rejected?

A consumer proposal can be rejected by a creditor, but that doesn’t mean you are out of options or alternatives.

After you file a consumer proposal, creditors have 45 days to vet and vote on your proposal. In that time, they can: reject the proposal, reject the terms of the proposal and ask for a creditors meeting, accept the proposal or do nothing.

Votes are counted only if a creditors meeting is requested. If creditors then vote to reject your proposal by a majority, you have the following options:

Renegotiate the terms of your proposal
Withdraw your proposal and file for bankruptcy
Pursue a different type of debt relief solution
File for a new proposal at a future date

Where are you based?

Harris and Partners have offices across Ontario and Alberta, including: Markham, Barrie, Brampton
Brantford, Calgary, Hamilton, Kitchener, North York, Oshawa, Pickering,St. Catharines and Toronto.

We also operate in the following areas and surrounding areas: Waterloo, Lethridge, London, Windsor, Geulph, Kingston, Kanata, Milton, Greater Sudbury, Red Deer, Edmonton, Fort Mcmurray

You can contact us here today for a FREE consultation and advice on corporate bankruptcy.

Get in touch with Harris & Partners

Don’t wait for your debts, penalties and interest charges to increase. For most, the first step onto the path toward a debt-free life involves filing a consumer proposal. With fewer, less expensive payments, consumer proposals are a less stressful way to face your debts head-on.

Harris & Partners Inc. is your go-to source for debt help in Toronto and Southern Ontario. We have conveniently accessible locations throughout the Markham, Barrie, Brantford, Hamilton, Kitchener, Oshawa, Pickering, St. Catharine’s, Brampton, Toronto and North York areas. We are determined to use our expertise to help you live debt-free. Get in touch with a member of our team today!

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