By working closely with a Licensed Insolvency Trustee and following these steps, a consumer proposal offers an effective, manageable way to reduce debt and regain financial control without the harsher consequences of bankruptcy. Here’s how it works:
Consult with a Licensed Insolvency Trustee
The Consumer Proposal process begins with a free, no obligation consultation with a Licensed Insolvency Trustee (LIT) based in your province.
During this meeting, you’ll review your income, expenses, and total debt to determine if a Consumer Proposal is the best route for your situation and what your offer over time would need to be.
File a consumer proposal
Once you decide to proceed, the Licensed Insolvency Trustee will help you put together the paperwork, review this with you and file the Consumer Proposal. This formal document outlines the repayment terms you’re offering to your creditors, usually monthly payments over up to five years. There are no other fees for you to pay. Different to a bankruptcy, in a Consumer Proposal, you do not lose your assets (the things you own).
Immediately on filing, your protection from your creditors begins. The Licensed Insolvency Trustee deals with the creditors to ensure they have a claim, and whether they are accepting your proposal as filed or handle any negotiations subject to your approval. Baigel Corp. consistently maintain one of the highest acceptance rates among all Licensed Insolvency Trustees in Canada.
Your personal information related to your Consumer Proposal is handled by Baigel Corp. in accordance with the PIPEDA laws of Canada. The only people who receive the information about your Consumer Proposal are the creditors, the federal Government who issues the certificate that starts your protection, and the court if needed. Before your information is shared with any additional parties, we would receive your consent.
After the required majority of creditors accept it, the Licensed Insolvency Trustee handles the court approval process when on the rare occasion it’s needed. On court approval, the Consumer Proposal becomes legally binding upon all the creditors, even those who voted against accepting it.
Your key duties during a Consumer Proposal
- Tell the truth, fully disclosing everything the Licensed Insolvency Trustee asks you
- Maintain the payment schedule set out in your Consumer Proposal
- Attend two one on one financial counselling sessions with a licensed insolvency counsellor (no extra fee to you) and any other meetings that may occasionally be called
- Keep the Licensed Insolvency Trustee informed of any changes in your contact information
Financial counselling sessions
To support your path to financial health, you will benefit from two mandatory financial counselling sessions with the trustee. These sessions focus on budgeting, money management, and strategies to avoid future debt problems, helping you build better financial habits for the future and prevent the same situation from arising again.
Certificate of Full Performance – Setting your debts to zero!
After completing your Consumer Proposal payments, the Licensed Insolvency Trustee has the authority under the federal law to sign your Certificate of Full Performance. Stopping the creditors’ collection efforts and restoring your budget to a healthy, affordable level was the first step. This certificate is the real goal because all the debts covered by your Consumer Proposal are now legally set to zero.
You are now well on your way to your fresh financial start.
Rebuild your credit report
Although a Consumer Proposal impacts your credit report, it is generally less damaging than bankruptcy. For individuals who have already missed payments on debts or are significantly behind with payments on multiple debts, often a Consumer Proposal proves to be the fastest route to rebuilding credit.
Soon after your Consumer Proposal begins, you can begin rebuilding your credit. There are several important steps you can take, and these will be discussed with you based on your personal situation in your meetings with Baigel Corp.’s Licensed Insolvency Counsellor. Over time, by doing the important steps, your credit score will improve, helping you regain access to credit, loans and financial products such as house mortgage and car loans.