Consumer Proposals: Government Debt Relief Programs in Canada
A consumer proposal is a Canadian federal government debt relief program that is available to those “honest but unfortunate” people who have more unsecured debt than they will ever reasonably be able to pay back on their own.
Unlike other debt relief options, consumer proposals are legally binding agreements between debtors and their creditors. Proposals are governed by the Bankruptcy and Insolvency Act, and are monitored by the Office of the Superintendent of Bankruptcy.
Note: in Ontario, proposals can only be filed and administered by licensed trustees in bankruptcy, such as David Sklar & Associates.
What’s Covered
Consumer proposals provide debt relief on unsecured debts such as credit cards, bills, payday loans, CRA taxes, etc. Secured debts such as mortgages are not covered. There are some types of unsecured debt that cannot be removed with a proposal including: alimony, child support, court fines, and some student loans.
What Happens
In a proposal, the debtor, through his/her trustee, formally offers to pay back a portion of their unsecured debt over a period of up to 5 years, at the end of which time they will be released from their debts. The majority of creditors must vote to accept the proposal before it becomes binding.
In addition to making regular payments to the trustee for disbursal to their creditors, the debtors must attend credit counselling sessions where they will receive the training and skills needed to manage their finances.
Benefits of Consumer Proposal Debt Relief for Debtors:
- keep assets
- avoid bankruptcy
- stop collection calls
- stop interest charges
- remove garnishees
Need More Information?
If you are in financial distress, and unable to repay all of your debts, you may qualify for a consumer proposal. To find out more about this government debt relief program, you need to speak with a Licensed Insolvency Trustee.
If you live in the Toronto area, you are welcome to contact David Sklar & Associates, Licensed Insolvency Trustee for a FREE, no-obligation consultation. We will review your finances with you in private, and discuss all of your debt relief options. Call us a 416-498-9200 to book your free consultation at one of our six convenient locations.
