Category: Bankruptcy Questions

Consumer Proposal: An Alternative to Bankruptcy

Consumer proposal (“proposal”) is the main alternative to filing an assignment in bankruptcy.  A consumer proposal is an offer made by you to your creditors which may enable you to pay a portion of your debts over an extended period of time.  The amount that you pay and the length of time you are given to pay is determined in a consultation with a trustee in bankruptcy-a trustee acts as the Administrator. Consumer proposal is based on the amount of your income, living expenses and any other financial responsibilities.  A consumer proposal is sometimes called a “Debt Consolidation Arrangement”.

This action stops creditors from taking legal action to recover their debts from you.  It also stops public utility companies from discontinuing services.  It is important to note that this option does negatively impact your credit rating.  Talk to your trustee about this impact.  Consumer Proposals are only available to individuals (not businesses) and the debt can not exceed $250 000.  You also retain all of your assets unless they are pledged as security to a debt in which case the agreement has to be read.

Process:

1. Seek the help of a bankruptcy trustee who will act as the administrator of your proposal not as a trustee in bankruptcy

2. A trustee will assist in preparing all documents and will file them in the court as required

3. Creditors are given 45 days to accept or reject the offer

4. Once the creditors approve the proposal the trustee will then obtain court approval

Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.