A proposal is made to the creditors through a Trustee in Bankruptcy. It does not mean you are bankrupt.

If the creditors vote in favour of the proposal, and the court approves it, then the proposal is a binding contract which all creditors must accept even the creditors who did not vote for the proposal.

Proposals are a better deal for the creditors than bankruptcy and in the vast majority of cases are accepted!

Consider a Consumer Proposal Before Undertaking Credit Counselling Repayment Programmes

A Consumer Proposal is a means to negotiate with your creditors for the reduction of you debts and/or extension of time for payment of their debts. The payment schedule that is created in consultation with a your advisor is based on your income, living expenses and family creditors. It prevents your creditors from taking legal actions to seize assets or garnishee wages.

Proposals are almost always accepted since the creditors will certainly get more than if the debtor goes bankrupt.

A Consumer Proposal is available to debtors owing less than $250,000, excluding a mortgage on the principal residence

Things to know about a personal proposal
• Generally, a personal proposal is better than credit counselling arrangements
• The debtor is not automatically bankrupt if the consumer proposal is not accepted
• The proposal and the payments cannot be for a term of more than 5 years
• Stay of all proceedings against the debtor
• All creditor collection efforts, including garnishees, must stop when a proposal is accepted
• Debtor is required to take two counselling sessions
• Can only be filed through a trustee in bankruptcy or an administrator of consumer proposals
• The creditors must be better off under a Proposal than under a bankruptcy
• Administrator must file a report to the creditors on the affairs of the person and the causes of financial difficulty

Consumer Proposal versus Bankruptcy - - - - Consumer Proposals are better than Bankruptcy:
• When the debtor desires a quick resolution and is prepared to pay a premium to achieve that result
• When a discharge is likely to be contentious or a substantial condition is likely to be imposed
• When the debtor wishes to avoid bankruptcy altogether
• When the debtor wishes to continue in business and will be prevented from so doing if obliged to disclose that he is a bankrupt when dealing with third parties
• When professional accreditation may be lost or put at risk by a bankruptcy
• When a bankruptcy will result in a secured creditor acting on its security
• When the debtor wishes to retain some key asset (e.g. a home, heirloom, secret process or impending inheritance)
• When the debtor has previously been bankrupt.