Consumer Proposal

A consumer proposal is filed through a Licensed Insolvency Trustee ("LIT"). A LIT is a professional licensed by the Office of Superintendent of Bankruptcy to administer the process of filing a Consumer Proposal under the Bankruptcy and Insolvency Act (Canada). 4 Pillars is not a LIT, 4 Pillars works with the debtor to fully understand all options to deal with debt and how each option fits their budget and the long term impact on their credit rating. If you decide a consumer proposal is the most viable option you will be introduced to a LIT where they will prepare and file your consumer proposal.

A Consumer Proposal is a viable restructuring option for over 45,000 Canadians a year, allowing the consumer to seek legal protection from their creditors under a Federal Statute (Bankruptcy and Insolvency Act) whereby a debtor usually only repays a portion of what they owe interest-free.

Read our guide to consumer proposals and debt consolidation

Highlights

• Payback a percentage of what you owe without interest or penalty
• The repayment period is up to 60 months
• The repayment amount is based on your budget and ability to pay

Consumer Proposal Benefits

• Most wage garnishments cease immediately
• Interest stops accumulating from the day the consumer proposal is filed
• Collection agencies and creditors can no longer contact you
• Consumer proposals do less damage on your credit bureau rating than a bankruptcy by reporting as a "7" instead of a 9. So it is easier and quicker to start rebuilding your credit

Through this process, a debtor is required to give "full disclosure" of all their assets, liabilities, income and expenses, as well as business interest as part of the process.

Additional Information

• You must be insolvent to file a consumer proposal (debts are more than assets)
• Your creditors are required to vote on the consumer proposal
• A consumer proposal is an alternative to Bankruptcy
• You cannot pick and choose the debts that are included (all debts must be included)
• You cannot eliminate support or alimony obligations
• You cannot eliminate student loans under seven years old
• You cannot include secured debts such as mortgage and car loans
• You are allowed to keep assets based on Provincial legislation

4 Pillars works with the debtor to fully understand all options to deal with debt and how each option fits with their budget.