How to File a Consumer Proposal – and Who to Contact First

So you’ve looked at your debt situation and have decided you need help.

You’ve done some research and you’re interested in filing a Consumer Proposal.

You’ve heard about how a consumer proposal is the number 1 option in Canada for dealing with a debt problem.  You’ve also heard about the many advantages a Consumer Proposal offers.

Now the question is – How do I file a Consumer Proposal and whom do I contact?

I’ll start the answer by addressing the second part to that question first.

A Consumer Proposal in Canada, can only be filed through an office of an adminsitrator of Consumer Proposals.  To be a Consumer Proposal administrator you have to also be licenced as a trustee in bankruptcy.   So, that’s easy… contact a trustee.

If you’ve seen websites or heard commercials on the radio about companies who promise to settle your debts through “government programs” beware!  If they’re not a trustee, they’re not licenced to administer a Consumer Proposal, therefore the program they offer is NOT a program recognized by the government of Canada (Nor for that matter, a lot of your creditors).

The first part of the question was how to file a Consumer Proposal?

Here is a typical step by step guide of what to expect:

  • After you contact a consumer proposal administrator from our network of regional trustees, you’ll be put through to one of trustees or professionals who will ask you to tell us some basic information from you about your situation.  We’ll ask you for quick questions regarding; Your debts, your assets, your income, your family size and what led to your financial difficulty.
  • We will of course keep an open mind and we’ll discuss all available options for you and give you a quick overview of each one.
  • If it sounds like a Consumer Proposal will be a good option for you, we’ll book you a time to come in and meet with a trustee who’ll look at your situation in more detail.
  • At this meeting, we’ll want to make sure we gather all the relevant facts so that we can ensure you understand how a Consumer Proposal works and it’s advantages and possible disadvantages when compared to other options available.
  • It’s a very transparent process and you’re welcome to ask any questions (even if you think it might be a silly question).  We want to ensure you fully understand your options before you decide on the right choice for you and your family.
  • We’ll discuss with you the ideal terms that should make up the proposal (ie. What you should offer to repay).
  • This meeting is free.  There is no up front fee, interest or additional hidden fees to filing a Consumer Proposal.
  • The trustee will explain to you how the trustee gets paid and how all relevant filing fees and taxes are paid out of the proposal too.  So therefore, the trustee’s motivation in preparing a good and succesful proposal is that it has to work in order for the trustee to get paid too.
  • If the trustee set the payments too low, the creditors might not be on board and could reject it or ask for a bigger offer.  If the trustee sets the payments too high, you might not be able to afford it in  the long run and therefore the proposal wont work for you.  Either way, if it does not work, it’s no good for anyone, which is why over 99% of all proposals are accepted – because the trustee has the knowledge and experience to find a solution that works for everyone.
  • Once all these things are in place we’ll then work together with you to finalize your application form.  The application form is a simple form that allows us to ensure we have all the relevant facts and documents in place that we need in order to prepare your proposal.
  • Filing a proposal can be a relatively quick process.  We only need a day or two to prepare the legal documents that you’ll need to come back and sign.
  • On the day you return to sign the paperwork, we’ll take you through each form in detail so you understand what you’re signing and we’ll also set up your monthly paymets to come out of your new bank account so you dont have to keep coming back to our office each month with cash payments.
  • The proposal paperwork will then be electronically filed with the government. (pretty much the same way you e-file a tax return).
  • The government sends back a Certificate of Filing form immediately back to the trustee, so you leave our office knowing that it’s been registered with the government and the legal protection of the proposal is in full effect.
  • From that moment, when you go home, if the phone rings and it’s a creditor wanting money, you can give the creditors our name and number and advise them you’ve filed a proposal.
  • The creditors have only 45 days to say yes or no to the proposal but the good news is that even during those 45 days you’re fully and legally protected from your creditors even though they’ve not offically accepted it at this stage.   We certainly wont be telling you to ignore the phone calls for 6 months!
  • As mentioned before, usually over 99% of all proposals are accepted – this is because as long as the proposal is fair, reasonable and gives the creditors a better return than a bankruptcy would then there’s no other real reason left to reject it.
  • Each creditor will get one vote for every dollar you owe them.  At the end of 45 days, we tally up the votes.  If more than 51% of the votes are in favor, the proposal is accpeted and is binding on all the creditors (even on some that might have voted no).
  • From there, you only need to make sure your payments are made on time each month and that you attend to free credit counselling sessions (which we’ll help you schedule).
  • At the two counselling sessions you can meet with one of our fully qualified proffessional credit counsellors who’ll then be able to give you some great pointers on how to budget, manage money, rebuild credit and be more mindful of warning signs of finacial difficulty.

There’s nothing really complicated about filing a consumer proposal.  It all starts with the decision to get started.  No matter what your situation, we can find work out a proposal that will work for you or we can find you an even better option to deal with your debts.

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Howard Hayes

Howard Hayes is a Licensed Insolvency Trustee and Consumer Proposal Administrator with Hoyes, Michalos & Associates. Howard manages offices in Cambridge and Brantford, Ontario. He has been helping people in his community become debt free since 2005. Contact Howard today to find the right debt solution for you.


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