A consumer proposal is a legally binding agreement between you and your creditors, arranged by a Licensed Insolvency Trustee, to settle debts under modified terms, typically involving reduced total debt and extended payment periods.
It depends on individual circumstances. A consumer proposal allows you to retain assets and is less impactful on credit, while bankruptcy can offer quicker relief but has more severe consequences and asset loss. Consult with a Licensed Insolvency Trustee to determine the best option for you.
Choosing a consumer proposal can offer benefits like debt reduction, avoiding bankruptcy, retaining personal assets, fixed monthly payments, and relief from interest charges, providing a structured path to financial stability without the severe implications of bankruptcy.
A consumer proposal will impact your credit rating. It’s recorded on your credit report and remains there for three years after completion, affecting your ability to secure credit during this period. However, it is generally less damaging than bankruptcy.
To be eligible for a consumer proposal, you must be insolvent, owing more than $1,000 and unable to meet debt payments as they come due, and your total debts must not exceed $250,000 (excluding mortgage). Additionally, your ability to pay must be acceptable to creditors.
Filing a consumer proposal involves consulting a Licensed Insolvency Trustee, determining your eligibility, creating a proposal, submitting it to creditors, awaiting creditor acceptance, and, if accepted, adhering to the new payment terms and completing mandatory financial counseling sessions.