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A Consumer Proposal is a formal debt settlement arrangement regulated by the government of Canada. It allows individuals to negotiate with their creditors to repay a portion of their debt over a set period, usually up to five years, in a more manageable way.

Most unsecured debts, such as credit card debt and personal loans, can be included in a Consumer Proposal. To be eligible, you must have a stable source of income and owe less than $250,000 (excluding your mortgage) as of the date you file.

When you file a Consumer Proposal, it legally binds all your unsecured creditors. They must stop all collection activities, including calls, letters, and legal actions. Creditors then have the opportunity to vote on whether to accept your proposal.

Some benefits of a Consumer Proposal include lower monthly payments, a fixed repayment schedule, and protection from legal actions by creditors. It also allows you to keep your assets and avoid the stigma of bankruptcy.

While a Consumer Proposal offers several advantages, it will appear on your credit report for three years after you complete it. This can affect your ability to obtain credit during that time.

The insolvency or bankruptcy trustees job is to:

• Explain your options

• Give advice and information

• Complete all documentation

• Deal with creditor on your behalf

• Guide and help you through the bankruptcy process

As well, bankrupts are required to complete two financial counselling sessions, directed by the trustee.