#1 Bankruptcy Alternative: Consumer Proposal
If consumer credit counselling and Debt Management Plan do not work for you, but still - you can afford regular monthly payments and prefer to go with one of the bankruptcy alternatives instead of filing for personal bankruptcy, you might want to consider making a consumer proposal to your creditors.
What is a Consumer Proposal?
A consumer proposal is similar in concept to a Debt Management Plan: you can afford to repay a portion (or all) of your debts - you only need more time to pay. The difference between the two is that a consumer proposal is a legally binding procedure, whereas a Debt Management Plan is a voluntary agreement between you and your creditors. In addition, a proposal is administered for the court by a licensed bankruptcy trustee acting as the consumer proposal administrator, while Debt Management Plan is a service provided by accredited credit counsellors.
Proposals were created as a bankruptcy alternative, and are best suited to persons with debts in excess of $5,000 (to a maximum of $75,000), who have the ability to repay a portion of their debt and are looking for a debt management solution that does not include bankruptcy.
An advantage of filing a consumer proposal is that it stops all wage garnishments by your unsecured creditors. They cannot take you to court until the proposal has been dealt with either. In addition, when you file a proposal, all of your unsecured debts are frozen and no more interest accumulates against them.
For more details on how consumer proposals work and how you can use them to negotiate your debts with creditors, please visit our Consumer Proposals: Debt Negotiation & Settlement page.
If you are experiencing financial difficulties, and are considering filing for a consumer proposal, we recommend you, as the first step, seeing a trustee, a licensed consumer proposal administrator (only a licensed trustee can assist you in filing a proposal) for an initial, free consultation. They will analyze your situation, answer all the questions you have about proposals to creditors and other bankruptcy alternatives, and help you choose the solution that best fits your circumstances.