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3 Important Things to Consider When Applying For a Consumer Proposal

Debt can be a deep hole that’s very difficult to get out of. Millions of people struggle with this massive financial burden and desperately look for solutions that can help. One such solution is a Consumer Proposal. A consumer proposal is a legally binding agreement you make with your creditors with the aid of the government and a government licensed debt professional known as a Licensed Insolvency Trustee; and it’s a part of a formal debt settlement program developed under the Bankruptcy and Insolvency Act.

This program ensures all parties involved are treated fairly and the debt is resolved to the best benefit of the creditors as well as the borrowers. However, a consumer proposal isn’t for everyone. Here are some factors you need to consider when you apply for a consumer proposal.

1. Credit Seeking in the Near Future

If you plan to seek loans for cars, homes, and other such items in the near future, filing a consumer proposal may make this more difficult, but not impossible.  The program will have a negative impact on your credit score; if you have a consumer proposal on your file, creditors will be more reluctant to offer loans. However, even if you keep paying minimum installments just to keep creditors at bay, you likely already suffer from a bad credit rating. If your debt situation is really bad and you see no way out, a consumer proposal is a very practical option. Take advantage of our Free Consultation offer to get your questions answered.

2. The Debt Amount

Before you file a consumer proposal, consider your debt amount and your financial situation carefully. If you have heavy debts and are trapped in a cycle of defaults and minimum payments without any solution in sight, a consumer proposal might be a good idea for you. However, if your debts are under $10,000 and you have the financial ability to repay them if you cut down on other non-essential expenses, you should consider paying it off normally. As mentioned before, a consumer proposal will have an impact on your ability to get new credit in the near future, and will shake creditor confidence in you. If you have the ability to resolve the debt without taking on more debt or filing for a consumer proposal, you should do it.

3. Joint Debts

If someone else acts as a guarantor for your debt or holds a debt jointly with you, they will be liable for it even if you file a consumer proposal. However, your spouse or people connected to you won’t be impacted if they are just authorized users of a credit card. For example, if the credit card is taken in your name and your spouse has not signed any documentation and just holds a copy of the card in their name, they will not be affected when you file a consumer proposal.

If over 50% of your debts are held jointly you can file a joint consumer proposal.

Benefits of a Consumer Proposal

  • You can negotiate to pay back only a portion of the debt you owe. When creating a proposal to your creditors, you can work with your Administrator/Trustee to negotiate payment terms to repay less than what you owe. Creditors will usually agree if it is more than what they would receive if you filed for bankruptcy.
  • Pay over 60 monthly installments. You can negotiate to pay off the new (lower) amount over 5 years.
  • Your monthly payment never increases. Even if your income increases or you come into money after filing a Consumer Proposal your monthly payment is set and will not increase.  You can even pay off your consumer proposal early in this scenario.
  • Immediate stoppage of interest charges.
  • Collection calls from creditors stop.
  • All legal actions and claims against you are stopped. If your creditors have filed lawsuits or made legal claims or actions, all these activities will be stopped.
  • You can retain/keep all of your assets such as your car or home.
  • Less damaging to your credit than filing for bankruptcy. Comes off your credit report in a shorter amount of time and allows you to solve debt problems without going bankrupt.


In many cases debts and financial obligations can become overwhelming. If you have been struggling to pay off your debts and looking for options that can provide you with a fresh start give us a call for your Free, No-Obligation Consultation. It’s 100% confidential and risk free. We’ll provide you with more information on the options available to you and what can work best in your particular situation.


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