Consumer Proposals

Kelly Dey – Insolvency Trustee

In Ontario, consumer proposals are excellent way to get out of debt.

As government-mandated insolvency trustees, consumer proposals are one of our key debt relief solutions.

Whether you’re just beginning to explore debt relief or are ready to take action, we’re here to assist. Read below to learn how a proposal works. then give us a call today.

A consumer proposal is a government-approved way to settle debt. It helps people with unmanageable debt by consolidating what they owe. A licensed insolvency trustee works with you to handle the process.

The trustee negotiates with your creditors to reduce your debt by up to 70%. You then pay off the rest over 3 to 5 years, with no interest. This can save you thousands of dollars.

A consumer proposal allows you to avoid bankruptcy. You get to keep your property while making manageable payments to your creditors. It’s a fair solution for both you and the people you owe.

In a consumer proposal, you meet with a licensed insolvency trustee who acts on your behalf to renegotiate your debt with creditors. The trustee helps create a debt repayment plan that works for you.

The trustee sets up a debt restructuring agreement where you repay only a portion of your total debt. This is based on what you can afford, often reducing your debt by up to 70%.

Once your proposal is accepted, you’ll make one monthly, interest-free payment. The repayment period typically lasts up to five years, giving you time to pay off your debt without added pressure.

Government of Canada Video explaining how a Consumer Proposal works

To be eligible for a consumer proposal in Canada, you must meet specific requirements that ensure this debt relief option is the right fit for you:

• Debt Threshold: Your total unsecured debt, including credit card debt, medical bills, and loans (but excluding your mortgage), must be less than $250,000.

• Ability to Pay: You need to demonstrate that you can make consistent, manageable payments based on the terms of the proposal. This ensures you can realistically complete the payment plan.

• Residency: You must be a legal resident of Canada to file a consumer proposal.

• Insolvency Status: You must be insolvent, meaning you cannot keep up with payments or your total debts exceed your assets.

A consumer proposal is a flexible, sustainable way to reduce your debt, offering you the chance to regain control of your finances.

It provides a structured repayment plan, protects you from debt collectors, and avoids the more severe impact of bankruptcy. This process allows you to move forward without the stress of overwhelming debt, offering a fresh start and a clear path to financial recovery.

A consumer proposal offers a balanced and practical approach to debt relief. It provides a structured debt repayment plan that benefits both you and your creditors.

Here are several key advantages that make it an attractive option for those seeking financial stability:

• Immediate Protection: Once you file a consumer proposal, all collection activities, including wage garnishments, collection calls, and legal actions, are halted immediately.

• Asset Retention: Unlike bankruptcy, a consumer proposal allows you to keep your valuable assets, such as your home, car, and other personal belongings.

• Interest-Free Repayments: You can repay your debt through an interest-free payment plan, making it easier to manage your financial obligations without accumulating further debt.

• Flexible Terms: The repayment period can be spread over up to five years, allowing for manageable, budget-friendly payments.

• Debt Reduction: You only repay a portion of your total debt, often reducing it by up to 70%, providing significant financial relief.

In summary, a consumer proposal helps you reduce debt, protect assets, and offers a clear path to becoming debt-free—all without the severe consequences associated with bankruptcy. It’s a highly effective way to regain financial control and move toward a debt-free future.

★★★★★ When I lost my job we had to use our credit cards. On the advice of a friend I called YanchDey. They got me on a Consumer Proposal, we saved over 22 thousand dollars, we’re very grateful. The plan we did will make us completely debt free in 4 years. Rocco Scipanos

A key advantage of a consumer proposal is the protection it offers for your assets. Unlike bankruptcy, where you risk losing valuable assets such as your home or car, a consumer proposal ensures that none of your property is taken.

Here’s how a consumer proposal sets itself apart from bankruptcy:

• Asset Protection: In a consumer proposal, you keep your home, car, and other personal belongings. In bankruptcy, these assets might be sold to pay off creditors.

• Less Severe Consequences: A consumer proposal offers a way to deal with debt without the harsh penalties of bankruptcy, like losing your assets or having a longer impact on your credit history.

• Debt Repayment: You repay only a portion of your debt in a consumer proposal, typically over 3 to 5 years, with no interest. In bankruptcy, you may be required to surrender a portion of your income for a set period.

A consumer proposal is a great alternative if you want to regain financial stability, protect your assets, and avoid the severe outcomes of bankruptcy.

Consumer Proposal Example 1

John, a 35-year-old Canadian, has found himself under a considerable pile of debt.

He owes $20,000 in credit card debt and has personal loans amounting to $25,000. Unable to manage his monthly payments, he’s now dealing with persistent collection calls and legal threats from his creditors.

He decides to speak to a licensed insolvency trustee about a Consumer Proposals. Together, they develop a proposal for the trustee to present to his creditors, which includes:

• five-year payment plan
• manageable monthly payment of $216/month.
• interest, penalties & additional charges are stopped

Once this proposal is negotiated and agreed upon, it becomes a legally binding agreement. John is now committed to making the agreed payments, while his creditors are barred from taking any further legal action against him.

In John’s case, his total debt was $45,000. Filing a consumer proposal reduced his debt to $13,000 and saved him $32,000. The $13,000 is payable over 5 years at about $216/month. With the Consumer Proposal, he reduced his overall debt by a whopping 70%.

Consumer Proposal Example 2

Meet Sarah: A Successful Professional Facing Unforeseen Financial Challenges

Sarah, a 42-year-old marketing executive in Toronto, has always been financially responsible. She owns a condo, has a stable job, and enjoys a comfortable lifestyle. However, life took an unexpected turn when her elderly parents fell ill, requiring her to take time off work and cover their medical expenses. As the costs piled up, Sarah found herself relying more and more on her credit cards and lines of credit.

Over time, Sarah accumulated $55,000 in unsecured debt, including $30,000 in credit card balances and $25,000 from a personal loan. Despite her best efforts, she struggled to keep up with the minimum payments, and the stress began to take a toll on her health and well-being. She feared losing her condo and was overwhelmed by collection calls.

Realizing she needed help, Sarah consulted a Kelly Dey an insolvency trustee at YanchDey to explore her options. They discussed the possibility of bankruptcy but ultimately decided that a Consumer Proposal was a better fit for her situation.

Here’s what they came up with:

• Three-year payment plan
• Reduced monthly payment of $450/month
• All interest, penalties, and additional charges were immediately frozen

Sarah’s proposal was a win-win for everyone. Her creditors agreed to reduce her total debt from $55,000 to $16,200—a 70% reduction—payable over three years at $450/month. Once accepted, the proposal became legally binding, ensuring that her creditors could no longer pursue her for the original amount or take legal action against her.

Not only did Sarah avoid bankruptcy, but she also retained ownership of her condo and began to rebuild her financial future with a sense of relief. The Consumer Proposal allowed her to regain control, with the peace of mind that she would emerge from this experience stronger and more financially secure.

As always, it’s important to remember that each Consumer Proposal is unique and tailored to the individual’s specific financial situation. The outcome may vary depending on the agreement reached with creditors.

This consumer proposal calculator will show you an approximate of how much you could save.

Opting for a consumer proposal instead of other debt solutions can be a smart financial choice. Here’s why:

• Asset Protection: Unlike bankruptcy, a consumer proposal allows you to keep your valuable assets, such as your home, car, and personal belongings.

• Interest-Free Payments: You’ll benefit from an interest-free payment plan, making it easier to pay off your debt without worrying about accumulating extra interest.

• Lower Monthly Payments: Since you’re only repaying a portion of your total debt, monthly payments are often much more manageable than other debt management plans.

• Legally Binding Creditor Agreement: Once approved, a consumer proposal becomes a legally binding agreement that your creditors must honor. This offers peace of mind and stability as you work to pay off your debt.

A consumer proposal allows you to significantly reduce your debt and make one affordable monthly payment over a period of up to five years, with no interest or penalties.

Additional Benefits Once You Start the Plan:

• Wage Garnishments Stopped: All wage garnishments cease immediately.

• Legal Collection Actions Halted: Creditors can no longer take legal action against you.

• Debt-Free in Five Years or Less: You’ll achieve a debt-free status in under five years.

• Savings: You can potentially save thousands of dollars by reducing your debt and eliminating additional fees and interest.

With a consumer proposal, you’ll retain your assets, stop debt collectors, and dramatically reduce what you owe—often by up to 70%, including credit card debt and other unsecured debts.

If you’re looking for a debt solution that protects your assets and reduces your financial burden, a consumer proposal might be the ideal option for you.

In Canada, debt proposals are a legal solution designed by the Federal Government to help to those with consumer debt settlements. The primary characteristics of consumer proposals include:

• Reduction benefit: Save 70% or more on what you owe. You to pay back just 30% (or less) of your total debt in a Consumer Proposal.

• Affordable payments: Consumer proposals span across 1 to 5 years, with monthly payments geared to what you can afford.

• No additional fees:  Once the proposal is agreed upon, creditors cannot add interest costs, late penalties or any other fees.

• Legally Binding: the consumer proposal is legal agreement administered through an Insolvency Trustee. Once your creditors green light your proposal, it becomes a legally binding agreement between you and creditors.

• Avoids Bankruptcy: Consumer debt plans, like a proposal help consumers keep personal possessions while avoiding filing for bankruptcy.

Simply put, insolvency proposals allow a person with high consumer debt e.g. credit cards, to reduce the amount owed, with affordable payments spaced over a 1 to 5 year period.  At the end you’re completely out of debt.

★★★★★ The interest and payments just kept on going up, then the collection calls started.  My friend told my about YanchDey, I called and spoke to Kelly who explained how she could help with a consumer proposal.  We saved over $30,000, we now pay $250/month and will be debt free in 5 years! Andrea R. Oshawa

In Canada, a Consumer Proposal is a practical approach for individuals with significant debt. This process is facilitated by a Licensed Insolvency Trustee (LIT), who begins by conducting a thorough analysis of your financial situation. This evaluation includes reviewing your bills, income, and assets to create a proposal tailored to your circumstances.

• The essence of a Consumer Proposal is to propose a manageable way to repay only a portion of what you owe. This usually means you’ll only pay back a specific percentage of the debt, spread over a period of five years or less.

• The proposal is then filed with the Office of the Superintendent of Bankruptcy (OSB), which stops all unsecured collection activities like wage garnishments and collection calls.

• The next phase in a Consumer Proposal involves your creditors. Once filed, they have 45 days to accept or reject the proposal. The approval of the Consumer Proposal depends on the majority of your creditors, measured by dollar value, voting in its favor.

• When the consumer proposal is accepted, all unsecured creditors are legally bound to its terms. You’ll then start making payments through the trustee, who then distributes these funds to your creditors.

Completing the terms of the Consumer Proposal leads to a complete discharge from your debts.

Understanding Fees in Ontario’s Consumer Proposals:

In Ontario, the fees for a Consumer Proposal are conveniently deducted from your monthly payments, making the process straightforward and manageable. Here’s what you need to know:

• Inclusive Fees: The monthly payment you make under a Consumer Proposal includes all the fees. This means there are no separate bills for trustee services or administrative costs.
• No Surprises: Since the fees are part of your agreed monthly payment, there are no unexpected charges. This helps in easy budgeting and financial planning.
• Efficient and Regulated: The fees are set by federal guidelines, ensuring fairness. Your Licensed Insolvency Trustee handles the distribution of these payments to creditors, with fees deducted before distribution.

This system of including fees in the monthly payments of a Consumer Proposal simplifies your journey to debt freedom in Ontario, without the stress of extra costs.

Consumer Proposals come with a range of advantages that can offer you a fresh financial start. Here are three compelling reasons to consider this option:

• A Fresh Start: A Consumer Proposal allows you to reset financially, providing a new beginning free from the weight of debt.

• Significant Debt Reduction: This program can cut your debts and payments by as much as 70%, offering you substantial financial relief.

• Become Debt-Free Quickly: With a Consumer Proposal, you have the potential to be debt-free in as little as five years, allowing you to live your life without the constant stress of overwhelming debt.

At Yanch Dey understand that navigating the complexities of a Consumer Proposal can be daunting. That’s why we are committed to supporting you throughout the entire process.

From handling paperwork to explaining every step, we’re here to guide you. You’re not alone on this financial journey; we’ll be with you every step of the way.

Don’t hesitate—take the first step toward a brighter financial future with a Consumer Proposal and call us today!

Consumer Proposals are a legal arrangement designed to help individuals manage their outstanding bills. Here are key points to know:

• Legal Agreement: It’s a legally binding process governed by the Bankruptcy and Insolvency Act of Canada.
• Alternative to Bankruptcy: It serves as an alternative to declaring bankruptcy.
• Licensed Administrator: You must work with a Licensed Insolvency Trustee to file a Consumer Proposal.
• Unsecured Debts: It generally covers unsecured debts like credit cards, personal loans, and certain tax obligations.
• Proposal to Creditors: You offer to pay creditors a percentage of what is owed to them over a specific time period.
• Creditor Voting: Creditors have the option to accept or reject the proposal; acceptance requires approval by creditors representing at least 50% of the value.
• Interest Freeze: Once accepted, interest stops accruing.
• Asset Protection: Unlike bankruptcy, you usually get to keep all your assets.
• Monthly Payments: You will make monthly payments to the Licensed Insolvency Trustee, who will distribute these funds to your creditors.
• Credit Rating Impact: A Consumer Proposal will affect your credit rating but is generally considered less severe than a bankruptcy.
• Duration: Typically, a Consumer Proposal lasts up to 5 years, but it can be paid off sooner.
• Completion Certificate: After successfully completing all payments, you will receive a certificate of full performance, leaving you debt free.
• Exclusions: Not all debts can be included; for example, secured mortgages usually can’t be included.
• Costs: There are fees involved, but these are usually included in the monthly payments and regulated by government tariff.
• Eligibility: You must be insolvent (i.e., unable to meet bills as they become due), have bills not exceeding a certain threshold, and meet other criteria to qualify.
• Record Removal: A Consumer Proposal will stay on your credit report for three years after completion, affecting your ability to get new credit during that time.

Understanding each of these aspects can help you determine if a Consumer Proposal is the right debt solution for you. Call and speak to our friendly Insolvency Trustees to discuss your situation and how we can help you..

★★★★★ My husband was laid off, but our bills kept coming, we were drowning in debt. The consumer proposal solved our money problems and saved us $18,000. We will be debt free in four years, Thank you Susan N. Oshawa

What is a consumer proposal?

A consumer proposal is a legally binding agreement between you and your creditors to repay a portion of your total debt over a set period, typically up to five years. It’s a debt relief solution that helps you avoid bankruptcy.

Who is eligible for a consumer proposal?

Individuals with unsecured debts ranging between $1,000 and $250,000 (excluding the mortgage on their principal residence) are eligible for a consumer proposal. You must also be unable to fully repay your debts as they come due.

How does a consumer proposal affect my credit score?

Filing a consumer proposal will affect your credit score, giving you an R7 rating. However, this is less severe than bankruptcy, which carries an R9 rating, the most negative score.

What types of debts can be included in a consumer proposal?

Unsecured debts such as credit card debt, personal loans, lines of credit, medical bills, and payday loans can be included. Secured debts like mortgages or car loans are not included.

How long does a consumer proposal last?

A consumer proposal can last up to five years, though you can pay it off sooner if your financial situation allows. The payment terms are flexible and tailored to your budget.

Can I keep my assets in a consumer proposal?

Yes, one of the main advantages of a consumer proposal is that you can keep your assets, including your home, car, and other valuables. Unlike bankruptcy, no assets are seized.

What happens if my creditors reject the proposal?

If your creditors reject the proposal, your trustee can help you renegotiate and amend the terms. If an agreement still can’t be reached, you may need to explore other debt relief options, such as bankruptcy.

What are the costs associated with filing a consumer proposal?

The costs are regulated by the government and included in your monthly payments, so there are no upfront fees. The trustee’s fees are built into the proposal itself.

How do I start a consumer proposal?

To start a consumer proposal, you’ll meet with a licensed insolvency trustee. They will assess your financial situation and help you craft a proposal tailored to your needs and what you can afford to pay.

What are the advantages of a consumer proposal over bankruptcy?

A consumer proposal allows you to keep your assets, provides a structured repayment plan, and has a less severe impact on your credit score. Additionally, it stops wage garnishments and legal actions from creditors.

★★★★★ We spoke to a consumer credit counseling agency that recommended YanchDey. Our personal loans plus my student-loan left us with little at the end of the month.  The proposal was the best program for us, paying off our debts in 5 years.  We’re even saving money now to make a lump sum payment! Thank you NameWithheld, Oshawa.

Consumer Proposal Ontario | Consumer Proposals