The stages of a consumer proposal

When a situation beyond your control prevents you from repaying your debts, a consumer proposal is a beneficial solution that can come to your aid. Accompanied by a authorised insolvency practitioner, you can complete your application and get out of debt;

What is a consumer proposal?

A consumer proposal is a legal alternative to personal bankruptcy. This is a legal agreement filed with the Office of the Superintendent of Bankruptcy (OSB) and is agreed with all your creditors to discharge the majority of your debts. However, there are a few differences between bankruptcy and a consumer proposal, such as eligibility criteria and the repayment period. 

Why choose the consumer proposal?

In a situation where your debts seem overwhelming, there are several advantages to opting for a consumer proposal. By choosing this solution, you could: 

- Reduce your monthly debts;

- Keep your assets (house, car, etc.) ; 

- Receive creditor protection;

- Avoid bankruptcy

- Pay off your debts over a maximum period of 5 years;

Schedule an appointment with a Mallette licensed insolvency trustee to determine if a consumer proposal is right for you.

The 6 stages of the consumer proposal  

The consumer proposal application and approval process takes a few weeks. To give you an overview, we have divided the procedure into 6 important stages;

1. Start by finding the right licensed insolvency trustee 

The first step in the process is to call on an expert in consumer proposals. Trustees authorized in insolvency (SAI) are the only professionals authorized to administer this procedure and whom you should trust. 

Their licence issued by the Office of the Superintendent of Bankruptcy (OSB) is undeniable proof that they have all the skills required to advise you properly on your financial situation.

2. Debt repayment plan 

At the first meeting, your licensed insolvency practitioner will take the time to thoroughly analyse your situation and draw up a repayment plan based on your reality. Your licensed insolvency trustee will also make sure that you meet all the conditions and are eligible to file a proposal;

Together, you can work out a payment arrangement that takes into account your ability to pay. You will also be required to schedule two mandatory financial counselling sessions. These meetings are an integral part of the process of achieving good financial health;

<3. Document preparation

After taking all your important information into account, your licensed insolvency trustee will then be able to prepare the consumer proposal. He or she will prepare your file, making sure to put all the chances on your side;

4. Submitting the consumer proposal 

Once signed, your SAI will file the consumer proposal with the OSB. At that point, creditors will stop contacting you and you can slowly begin to regain your peace of mind;

Your advisor will then present the proposal to the creditors. He or she will also deal with the collection agencies on your behalf. Creditors have 45 days after you submit your proposal to deliberate on it (to vote for or against what you are offering them);

<5. Deliberation

Unlike bankruptcy, a consumer proposal can be accepted or refused. If you have several creditors and 25% (in cash) of them (e.g. $3,000 out of a total of $12,000 in debts) request a consumer proposal, a meeting of creditors must be held;

If this is the case, you will need to be present at this meeting, organised by your SAI, during which a vote will be held on whether to accept the proposal. If no meeting is requested, your proposal is automatically accepted;

6. Freeing yourself from debt.

Once the application has been accepted, you must ensure that you comply with your contract. Your payments must be made on a monthly basis as stated in your application;

Any other personalised conditions added to your agreement will also have to be honoured. The two compulsory financial advice sessions will be very useful in improving your financial management and ensuring that you never find yourself in a similar situation again;

What happens if my application is rejected? 

Unlike personal bankruptcy, creditors can refuse your proposal to the consumer. In such a scenario, your SAI will guide you in considering a counter-offer. In the event of a decisive refusal, bankruptcy is often the last resort, but it is up to you to make this decision. The Mallette Syndics et Gestionnaires inc. team is equipped to support you every step of the way;

In conclusion

A consumer proposal is an insolvency solution that allows you to get rid of most of your debts and regain peace of mind. Whether you live in Bas-Saint-Laurent, Lanaudière, Montreal, Quebec City or any other region of the province, make an appointment with a licensed trustee on our team today!