Common Questions about Consumer Proposals in Canada

consumer proposal CanadaConsumer Proposal in Canada: A Quick Overview

When filing a consumer proposal in Canada, you are offering a legal contract to your creditors to repay a portion of your debt over a period of up to 5 years.

To get started, your consumer proposal administrator will gather information from you at the initial consultation meeting regarding your debts, as well as any assets that you have and what they are worth. These values are typically factored into the proposal contract so that you are able to keep your belongings.

The next step is to review your budget and be sure that you have the necessary funds to afford a payment plan and the proposal terms that you will offer in your contract.

Once you have made a decision about the payments that you are able to afford, your creditors vote on your offer within a 45 day period. If the majority of your creditors agree – determined by your highest owing debts – it becomes a legally binding contract for both you and all of your creditors, not only those that voted in favour of the proposal.

So you’ve done your research about the basics but you are still left with questions. Below is a list of commonly asked questions that might help to fill in the blanks.

Common Questions about Consumer Proposals

Q.   Will a consumer proposal stop the creditor calls?

A. YES. It should stop all calls if you have listed all of your creditors in your consumer proposal. We legally have 10 days to notify them of the contract from the day that you sign your proposal.  You will also receive a copy of the signed documents and creditor calls should stop shortly thereafter.  If your creditors continue to call, please let us know and we will contact them directly to provide the information that they require.

Q.  What additional costs are there? Are there any upfront costs?

A. NO. A consumer proposal includes all fees and expenses in the contract as a kind of “one stop shopping” payment plan. When you make your monthly payment to us, we take a portion for our fees and expenses and a portion will go to your creditors. Nothing extra.

Q.  I am being garnished. Can the garnishment be stopped?

A. YES. A garnishment can be stopped on the date that you sign your consumer proposal. It is a legal process, and as such, there is a legal stay of proceedings that stop all garnishments.

Q.   Am I locked into the consumer proposal contract?

A. YES AND NO. The consumer proposal is a legally binding contract so you must complete it by making your payments within 5 years. HOWEVER, you can pay it off faster with no penalty. This means that if your earnings increase you could potentially increase your payments to reduce the length of your consumer proposal.

Q.   What if my creditors vote against my payment terms, am I bankrupt?

A. NO. You are not automatically bankrupt if your creditors vote against your initial payment terms. Your options include counter offering, walking away and dealing with your debts on your own, or filing for personal bankruptcy.

Q.   Can I include student loans or tax debts in my consumer proposal?

A.  NO. As a consumer proposal is a legally binding contract, you must declare all debts including student loans and personal taxes. However, student loans must be older than 7 years since your end of study date. Although this loan is a debt, if it has been less than 7 years since you have stopped being a student, it will not be a debt that is paid off once you make the final proposal payment; the debt will survive. Keep in mind that during your proposal they cannot pursue you for the debt and this may give you time to get back on your feet again financially to deal with your student loans.

Q.  If I get a better job in a year or two, can the creditors come after me for more money?

A.  NO. A consumer proposal is a legally binding contract and a deal is a deal. However, with a better paying job you may consider paying off the proposal faster.

Q.   Can I keep any assets I get after the proposal is in place?

A. YES. When you draft your proposal, the value of any assets you have at the time are factored into the contract. Just as if your income increases, anything that happens once you have filed does not affect your proposal terms. Any assets that you acquire after the proposal has begun, are assets that are yours to keep and they do not affect the contract that you made with your creditors.

If you are considering a consumer proposal, our licensed consumer proposal administrators can answer any questions you have as part of your free initial consultation. Contact a consumer proposal administrator in your area today.

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4 thoughts on “Common Questions about Consumer Proposals in Canada

  • Tracey

    I have a question. I am currently in a consumer proposal for 2.5 years. I have no late payments or arrears. The only loan I have is my car and no late payments or arrears there either. I got caught up in my debt. All creditors were paid the minimum amount each month. I had no late payments or arrears either. I decided to do a consumer proposal to ease the pain of the debt. So the question is this: my family and I have been at our currently apartment for 10 and 14 years. We have never been late on rent or been evicted. I am looking into a bigger apartment. I know that they will do a credit check but I don’t know if the consumer proposal will affect our chances of getting it. My income last year was $78000 and my husbands was $11500.i have a stable job and been there 10 years. Help I don’t know what they may look for on my credit check.


    • J. Douglas Hoyes

      Hi Tracey. The answer depends on the landlord. Some landlords may say “you are in a consumer proposal so we don’t want to rent to you”. However, that would be very unusual.

      Most landlords would say “you have very high income, and you were never late on your rent, so you are an attractive potential tenant”. Most landlords care about getting paid, so if you have a good income and first and last months’ rent, you should have no problem.

      A large corporate landlord (that manages a huge apartment building) may have stricter credit check rules. If that happens, renting an apartment from a smaller company or a private owner may also be a good option.

      In general, it would be unusual for a consumer proposal to be a reason for not being able to rent an apartment.

  • Doris C.

    I am thinking of going into Consumer Proposal. I have 2 vechiles, an older car that is paid in full and a newer van which I am financing. I still owe about 20,000 on the van. How will these vechiles effect my Consumer Contract?

    • J. Douglas Hoyes

      Hi Doris. What you do with your vehicles in your consumer proposal is up to you. You can keep the paid for car. With the van that you are financing, you can either continue to pay the loan and keep it, or you could stop paying the loan and surrender the vehicle as part of your consumer proposal. Your licensed consumer proposal administrator can explain the options in more detail at your no charge initial consultation.


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