Five things to know about filing a Consumer Proposal

If you’re struggling with unmanageable debt and worry you’ll never break the cycle of living from one bill to another, a Consumer Proposal may help you get the financial fresh start you deserve.

This is the second in a five-part blog series about what Consumer Proposals are, how the process works, and whether they might be the right solution for you to get permanent relief from your unsecured debt.

1. The Consumer Proposal process begins with a Free Confidential Consultation

MNP Licensed Insolvency Trustees provide a free, no obligation consultation to review your financial situation, understand your goals, and determine the debt relief options available to you. They will explain each option in detail and provide an unbiased opinion of which would work best for your situation.

2. Eligibility criteria is relatively straightforward

To qualify for a Consumer Proposal, you must:

1. Be unable to meet your monthly debt obligations as they come due; and
2. Owe less than $250,000, excluding the mortgage on your principal residence.

A person who is already in a bankruptcy also qualifies to file a Consumer Proposal.

3. Creditors vote on whether to accept the proposal, each dollar owed equals one vote

A Consumer Proposal is deemed accepted 45 days after it is filed, provided there is no requirement for a meeting of creditors. A meeting of creditors is required if 25 percent of the proven creditors request it within the 45-day period after filing the Consumer Proposal.  The purpose of the meeting is to vote on the Consumer Proposal.  The Consumer Proposal will be accepted if a majority in value of voting creditors votes to accept the Consumer Proposal. 

4. Rejected Consumer Proposals may be amended if it fits within your budget

The Consumer Proposal may be amended or altered if necessary to obtain creditor approval.  If your creditors vote to reject your Consumer Proposal, the Licensed Insolvency Trustee may communicate with the creditors to find out what revisions may be necessary to make the Consumer Proposal acceptable to the creditors. However, any revisions must still be payable within the maximum five years and reflect payments you can afford within your current financial means.

If it is not possible to reach a consensus with your creditors, the Consumer Proposal will be refused and Bankruptcy may be your only option.

5. You will have to attend two financial counseling sessions to complete your Consumer Proposal

Financial counseling sessions primarily focus on helping you build budgeting skills and learn how to set and achieve future financial goals. These are a condition of your Consumer Proposal and an essential part of the insolvency process. You will not be discharged from your debts if failing to complete your counseling sessions within the agreed timeframe.