A consumer proposal is a BIA solution that is administered through an authorized insolvency trustee (IAD or simply, trustee). This trustee will help you establish a proposal to pay your creditors a reasonable percentage of what you owe them and extend the time you have to pay your debts.
In a consumer proposal, all your payments are made directly to the insolvency trustee and the trustee distributes the monies equitably. As a result, you will no longer be subject to any type of harassment by your creditors.
The consumer proposal also allows you to stop the seizure of wages and the lawsuits against you.
What debts can be included in a consumer proposal?
Debts that can be included in a consumer proposal are debts that involve your unsecured creditors, such as:
- credit cards,
- unsecured lines and lines of credit,
- the tax debts (Revenu Québec and Revenue Canada),
- payday loans,
- personal loans.
Secured debts such as mortgages and auto loans can not be included. You will continue to make regular payments on your mortgage and car payment (loan or lease).
How will this affect my credit and how long will the proposal stay on my credit report?
A person who submits a consumer proposal is assigned a credit score of R9 during the proposal period, and then R7 when it is completed.
Worried about the impact of a consumer proposal on your credit? If you are considering a consumer proposal, it is highly likely that your credit rating is already suffering. In addition, even if a rating of R7 seems less than ideal, it also means that you take the necessary steps to repay all your debts and that you work to improve your credit rating.
A consumer proposal will generally stay on your credit report for three years after the entire process has been completed (which usually takes between one to five years).
Learn more about the impact of a consumer proposal on credit rating
Is it the same as bankruptcy? What happens to my property?
A consumer proposal is not the same as a bankruptcy because your assets will be protected .In the event of a bankruptcy, some of your assets may have to be turned over to the trustee, while in the case of a proposal, your property will not be affected in any way.
How long do I have to make my monthly payments?
The duration of your monthly payments depends on your financial situation as well as the details of your consumer proposal. However, a consumer proposal can not exceed five years.
Am I eligible for a consumer proposal?
The only way to know if you qualify for a consumer proposal is to arrange a meeting with a licensed insolvency trustee who will evaluate your situation and tell you which option is best for you.
If you qualify, the trustee will file the proposal with the Office of the Superintendent of Bankruptcy and submit the proposal to your creditors. Your creditors will then have 45 days to accept or reject it.
Can I refund my proposal sooner than expected?
Yes. If your consumer proposal is for a five-year term, but you are in a situation where you can afford to spend more money on your monthly payments or even pay off your debts, nothing stops you from do it.
Unfortunately, you can not leave an unsecured creditor out of your consumer proposal, even if it includes family and friends.
What other tasks should be done as part of a consumer proposal?
In addition to submitting a consumer proposal and making the agreed payments, you will need to attend two financial counseling sessions where you will learn budgeting and money management strategies to prevent a similar situation from occurring. reproduces itself. You will also learn how you can restore your credit rating.
Will creditors ask for more money if my financial situation changes?
Once the proposal is accepted, all creditors must honor the consumer proposal, even if your financial situation changes. If you find yourself making more money because of a promotion or a new job, you will not be required to pay more money towards your payments.
In a personal bankruptcy, your monthly payments are based on your income. So, if you believe that your income will increase significantly, it might be more interesting to choose the consumer proposal.