What is a Consumer Proposal filed under the Bankruptcy and Insolvency Act?
A Consumer Proposal is an agreement between a person and their unsecured creditors as a group. The agreement sets out what the person will do to settle their obligations to the unsecured creditors, thus avoiding bankruptcy. A person filing a Proposal must have less than $250,000 of debt, excluding mortgage debt on their home. The Proposal is filed through a Trustee/Administrator, who notifies and reports to the creditors regarding the terms of the Proposal. If the majority (by dollars owed) of creditors vote in favour of the Proposal, and the court approves it, the Proposal is a contract binding on all creditors. If the creditors vote against the Proposal then the person is not bankrupt, but may have few options other than filing bankruptcy. Filing a Proposal has a number of immediate advantages for a person with debt problems, including: The filing stops all collection and legal actions by unsecured creditors; and the Proposal process gives the person an opportunity to disclose the fa
