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A consumer proposal is a formal, legally binding process that is administered by a Licensed Insolvency Trustee (LIT). In this process, the Trustee will work with you to develop a "proposal" — an offer to pay creditors a percentage of what is owed to them, or extend the time you have to pay off the debts, or both. The term of a consumer proposal cannot exceed five years.
Payments are made through the Trustee, and the Trustee uses that money to pay each of your creditors.
What happens when you file a consumer proposal?
What happens when you file a consumer proposal?
The LIT will file the proposal with the Office of the Superintendent of Bankruptcy (OSB). Once your proposal is filed, you stop making payments directly to your unsecured creditors. In addition, if your creditors are collecting your salary(garnishing your wages)or have filed lawsuits against you, these actions are stopped.
The LIT will submit the proposal to your creditors. The proposal will include a report on your personal situation and the causes of your financial difficulties.
Creditors then have 45 days to either accept or reject the proposal. They can also do this either prior to or at the meeting of creditors, if one is held.
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