Consumer Proposals – FAQ

Jars filled with cut up credit cards
July 7, 2022

I didn’t want to go bankrupt, so I filed a Consumer Proposal but now I can’t afford the payments, what can I do?

We see a variety of situations where Debtors’ financial situations change after filing a Consumer Proposal.  If you have experienced a material change in circumstances ask your LIT about calling a meeting of Creditors to discuss options such as deferring payments, reducing the value of future payments or proposing a lump sum payment to reduce the remainder amount of the Consumer Proposal.

“Can I change my mind about filing a Consumer Proposal, and what happens if I do?”

After you have filed a Consumer Proposal, but before the date of deemed court approval (60 days), you can withdraw your Consumer Proposal without consequence, beyond losing your initial retainer to the LIT.  Most people filing Consumer Proposals already have a poor credit report, which will not get worse – however, some people have great credit scores when they file either a Consumer Proposal or a Bankruptcy, and they will have that score impacted.

“If I file a Consumer Proposal, do I have to make payments for sixty months?”

The terms of your Consumer Proposal will lay out how much money you are proposing to pay and over what terms.  Your Consumer Proposal cannot go more than sixty months, but it can be for a shorter term – if the Creditors are O.K. with that.  Creditors often take the position “if you can make payment for (say) three years, why can’t you do so for five?”.  Some Consumer Proposals call for lump sum payments, some require monthly payments, some may require infrequent or periodical payments. 

“Can I add new Creditors to my Consumer Proposal?”

No, absolutely not!  If you have acquired new debt after filing your Consumer Proposal, you cannot include that new debt in the Consumer Proposal.  The Consumer Proposal is made only to the Creditors that existed at the time of filing the Consumer Proposal.

“Why are my Consumer Proposal Creditors asking for more money than I offered them?”

While considering your Consumer Proposal offering your Creditors will consider what their returns would be if you filed a Bankruptcy instead, including the value of any assets they might be entitled to.  Creditors will also review your income and expense sheet to see if your living expenses are reasonable and if you might be able to pay more into the Consumer Proposal.  If you have excessive or inappropriate expenses, your Creditors might request that you think about making lifestyle changes to free up some extra money for them.

“If I forgot about a Creditor when I filed my Consumer Proposal can I add them later?”

Yes, but there can be limitations.  If you called your LIT and told them about a $600 cell phone bill that had been outstanding, they can simply add that to the ledger, and it will probably make no material change to the rest of the Creditors.  However, if you want to add in a $10,000 bank loan you had forgotten about it could make a material change to the other Creditors, reducing the dividend they expected when voting on the proposal, who could call for a meeting of Creditors to examine the possibility of asking you to increase your monthly payments to them.