How to File a consumer proposal in Canada

Making a proposal to your creditors can be overwhelming, especially when you may not understand what is happening, the legal terminology and the steps in the consumer proposal process. Below is a step by step explanation of the process you will go through when you make a formal arrangement with your creditors. Your trustee will guide you through this process.  

Congratulate yourself - Deciding to take control of your debt takes a lot of courage. You are taking a positive step toward a financially stable future.

Set up an complimentary appointment - BDO Canada Limited has over 70 proposal administrators across Canada available to help you review your financial situation and go through the process of making a proposal to your creditors. To find a consumer proposal administrator, click here. The first consultation is free and there is no obligation to act.  At your consultation, the consumer proposal administrator will review your financial situation and ask for information about your income (what you earn), your assets (what you own), your monthly expenses (who you owe) and your outstanding debts (how much).

Confirm your options - After reviewing your financial situation, the consumer proposal administrator will discuss with you your available options to get out of debt. The trustee will help you make an informed decision about whether filing a proposal to your creditors is the most appropriate solution for you.

Preparing the consumer proposal - The consumer proposal administrator will help you prepare a proposal to your creditors that is reasonable and fair for all. The trustee will help calculate the monthly payments you can make to cover your debts and set up a timetable that outlines how many months or years it will take you to pay off the debt.

Consumer proposal submission - Your consumer proposal administrator will file your proposal and send a notice to all of your creditors, advising them that can no longer make payments to them. The creditors will then have 45 days to consider the offer. During this time, you do not have to make any payments to your creditors and they cannot take collection action against you. When the majority of the creditors (over half) agree to the proposal, all are deemed to have accepted the proposal. Your administrator will also file a report that outlines your situation, the causes of your financial difficulty, and a summary of your assets, debts and creditors.

Meeting of creditors (possible) - If we cannot get the majority of the creditors to agree to the original offer you put on the table, we negotiate with them to discuss what they are looking for as part of the settlement, and then discuss modifications to the plan. We expect to reach an agreement with them and have your amended plan accepted. A meeting of creditors is not mandatory in a consumer proposal, but the Office of the Superintendent of Bankruptcy may request one to discuss the proposal. Creditors who make up at least 25 percent of all proven claims may also request a meeting. This meeting must be held within 21 days after being called. There, creditors vote with a simple majority of the dollar amount to accept or modify, or to refuse the proposal altogether.

Proposal is accepted - If no objection to the consumer proposal is received within 15 days after it is deemed accepts, the court will approve it. Once this occurs, you and all of your creditors are bound by the proposal. Your creditors will respond to us within 45 days and indicate if they are in agreement with the offer or not. If a majority agrees to the offer, then the amount you offered to repay in the proposal becomes the new amount of debt you owe and you will begin to make your monthly payments for the time period outlined in the plan.

Fulfill your duties - To successfully complete your proposal, you must fulfill the duties as outlined in the proposal. These include:

• Making your regular payments (or a lump sum payment, depending on the terms of the proposal you created with your consumer proposal administrator)
• Attending two counselling sessions to help you understand the causes of your debt and help you with budgeting and financial management
• Adhering to any other conditions outlined in the proposal

Proposal completion - If you have fulfilled your duties and met the terms of your proposal, your administrator will file the necessary final paperwork with the Office of the Superintendent of Bankruptcy and the creditors. You then will be legally released from the debts included in the proposal.