How to Make a Consumer Proposal?

Making a consumer proposal is a legal and regulated solution that allows you to pay off some of your debts while avoiding bankruptcy.

Available to anyone in debt, this process offers a genuine financial recovery plan. Find out below how to file a consumer proposal in Quebec and regain control of your finances.

What is a consumer proposal?

The consumer proposal is a legal agreement, governed by the Bankruptcy and Insolvency Act, that allows an indebted person to repay part of their debts according to a realistic plan drawn up with their creditors. This process must be administered by a licensed insolvency trustee, the only professional recognized by the Government of Canada to negotiate, file and manage this type of agreement.

In contrast to personal bankruptcy, the proposal allows you to keep your assets (house, car, savings) while reducing your monthly payments and stopping interest.

In other words, it's a more flexible alternative that's less damaging to your credit record, and aims above all to get you back on your feet financially.

5 steps to submitting a consumer proposal

1. Contact a licensed insolvency trustee

The first step is to make an appointment with a licensed insolvency trustee. During this confidential meeting, the trustee will analyse your situation and determine whether this solution is the most advantageous for you.

2. Assess your financial situation

The trustee then draws up a complete picture of your finances: income, expenditure, debts and assets.

This assessment establishes your real ability to repay and enables you to propose a realistic agreement to your creditors. The aim is to strike a balance between what you can pay and what your creditors will accept.

3. Preparing and submitting the proposal

Once the repayment plan has been drawn up, the trustee prepares and officially files the proposal with the Office of the Superintendent of Bankruptcy (OSB). This filing automatically suspends all legal proceedings and collection calls.

The proposal includes the monthly amount offered, the repayment period (up to 60 months) and the full list of creditors involved.

4. Wait for creditors to vote

After filing, your creditors have 45 days to accept or reject the proposal. A majority of them must vote in favour for the agreement to be approved.

In the event of disagreement, your association can negotiate a new offer that meets your expectations, while ensuring that it remains affordable for you.

5. Start making payments in accordance with the agreement

Once the proposal has been accepted, it becomes legally binding on all your creditors. You then make fixed monthly payments to the trustee, who is responsible for redistributing them. At this stage, interest stops, seizures are lifted and you can finally breathe easy financially while respecting your repayment plan.

What happens after the consumer proposal is submitted?

Once all your payments have been made, the trustee will issue you with a certificate of completion. This official document confirms that you have fulfilled all your obligations and that the debts included in the proposal have been legally extinguished.

This is a symbolic step, as it marks the end of your debt and the start of your financial reconstruction.

How to rebuild your credit rating

After the proposal, it's normal for your credit score to show a temporarily lower rating (R7). To rebuild it, all you need to do is adopt good management habits:

• Pay all your bills on time;

• Maintain a low credit utilisation rate (ideally below 30%);

• Check your Equifax and TransUnion reports regularly to correct any errors;

• Enter a credit card with a guaranteed deposit to recreate a positive history.

With regularity, your score will start to rise again in the first year following the end of your proposal.

Possibility of repaying faster

It is entirely possible to repay your proposal faster than planned. Any additional payments or prepayments reduce the duration of the plan and speed up your credit recovery.

This strategy is recommended if your income increases or if you receive an unexpected sum (bonus, tax refund, inheritance, etc.). The sooner you complete the proposal, the sooner you'll regain your financial freedom.

Restore your stability with confidence

A consumer proposal is much more than a solution to your indebtedness; it's a financial second chance. Supervised by a licensed trustee, it allows you to reduce your debts, protect your assets and regain control of your budget without having to start from scratch.

With the support of the experts at Mallette, you can move forward with confidence towards a new, more stable and stress-free start.