Consumer Proposals – What are they?

Simply put there are provisions under the Bankruptcy and Insolvency Act that make it possible, under certain circumstances, for someone to re negotiate the terms and conditions governing the repayment of debt. There are some rules around who can do this and some rules regarding eligibility.

Who are Consumer Proposals for?

Generally speaking Consumer Proposals are for people who have a good, secure employment situation but you have gotten way over you head in debt. You are sinking deeper and deeper into debt and simply can’t afford to continue without some financial relief. You have money to pay each month and are willing to due so but can no longer afford the payment. You don’t want to lose what assets you have left and are forced to consider bankruptcy and are looking for options.

Some Advantages of a Consumer Proposal

Some of the advantages of a consumer proposal are that you can negotiate to repay only a portion of the debt you owe and the interest on those debts stop growing. If you have collection agencies calling you all the time – they will have to stop. You can renegotiate all your credit card debt, bank loans and back taxes. Your won’t loose your home or other assets you may have and the new repayment plan can’t exceed 5 years so there will be a light at the end of the tunnel. You credit rating will be damaged but not as much as if you declared bankruptcy.

Creditors don’t have to accept a consumer proposal but generally speaking it better for them if you don’t go into bankruptcy. It’s better because nine times out of ten they are going to get more of their money back so in most cases a creditor will not appose the plan.

What a consumer proposal does not allow you to do.

You cannot pick and choose who you will pay and how much. If you are trying to avoid alimony or child support a consumer proposal will not relieve you of these responsibilities. There are some debts that can’t be renegotiated; your mortgage is an example.

Finally, there is a lot more to learn about consumer proposals as you might well imagine, the wise thing to do is contact a bankruptcy trustee in your area and get the information you need to move forward.