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Consumer Proposal Defined

A consumer proposal is probably one of the best kept secrets in the world of debt repayment; and like most secrets, there is a great deal of misunderstanding about what they are, who can file them and how they work.

Simply put, a consumer proposal is a forced settlement that is put on your creditors that can only be obtained through the assistance of a federally licensed debt restructuring company like Bromwich & Smith. When you file a consumer proposal, all of your creditors actions are immediately stopped (they can no longer call you, or continue a lawsuit, garnishee your wages or continue to hold a freeze on your bank account). Once the consumer proposal is filed and accepted, all of your creditors are immediately bound by the repayment terms of the consumer proposal that Bromwich & Smith files with the federal government on your behalf.

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Should I Consider A Consumer Proposal?

If you can’t afford to pay your bills and your creditors are constantly calling, you are probably looking for help in dealing with your debt problems. Filing a consumer proposal may be the solution to your financial troubles.


It helps you avoid filing bankruptcy.

A consumer proposal is different from a bankruptcy. A consumer proposal is a re-negotiation of the terms of your existing debt. To file a proposal, you’ll need to work with a licensed insolvency trustee in Alberta. The trustee will administer a consumer proposal that is affordable for you while still allowing you to pay a portion of your debt over a preset period of time. If a majority of your creditors accept your consumer proposal, this lets you settle your debt for a smaller amount without going bankrupt.

Alberta Consumer Proposal Basics

 Consumer Proposal Basics

If your debt is more than you can handle, you may want to consider a consumer proposal. Bromwich & Smith Licensed Insolvency Trustees can offer a number of solutions. A consumer proposal is one of two formal, legally binding ways to help settle your debts when you can no longer afford to pay your bills.


What is a consumer proposal? A consumer proposal is an agreement between you and your creditors that settles your debts for less. The law requires a Licensed Insolvency Trustee to administer the process. You and your adminstrator work together to make a proposal, which a majority of your creditors must accept in order to become binding. They may agree to accept less than you owe, extend the terms of your loan, or a combination of both. Your proposal must run no longer than five years. Once accepted, you pay one regular payment to your administrator who then pays your creditors.


Consumer proposals and your credit rating

Rebuilding Your Credit After A Consumer Proposal

A consumer proposal allows you to pay off your creditors and begin a strong financial future with a clean slate. It does put a blemish on your credit, but the good news is, there are plenty of ways you can start rebuilding your credit after a consumer proposal.


How a Consumer Proposal Affects Your Credit

When you file for a consumer proposal, chances are your credit is already suffering. You may already have late payments, collections, or liens. When a consumer proposal is accepted by your creditors, the proposal is also reported to the major credit reporting agencies. It then stays on your credit for three years following your payoff.


Consumer proposal benefits

Negotiating A Consumer Proposal

For many people, a consumer proposal is a welcome relief from not only debt, but also eliminates the need to file bankruptcy. Once you've decided this is the best option for you, the next step is negotiating the consumer proposal.


 It may sound overwhelming, but negotiating a consumer proposal is actually pretty straightforward. Here are a few things you can expect:


Your Bromwich & Smith Administrator will help.

From the very beginning, your Administrator will be there to guide and assist you. As a part of the process, you and your Administrator will complete forms that provide a clear and accurate

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Retaining my Assets With A Consumer Proposal?

The answer is yes. Unlike a bankruptcy, a consumer proposal allows you to keep your things and work through your debt problems at the same time. (Note: Certain assets may also be exempt in a bankruptcy).


What is a Consumer Proposal?

A consumer proposal is an arrangement between you and your creditors that allows you to settle your debt for less than you owe. It’s a good option for those who can’t afford to repay all their debts, but don’t want to file bankruptcy and lose their assets.

Bankruptcy & alternatives

Consumer Proposal & Division I Proposal

When debt becomes unmanageable, many Canadians turn to a Consumer Proposal for a solution. But what if you owe more than the maximum amount that a Consumer Proposal will allow? This doesn’t necessarily mean you’re headed to bankruptcy court. A Division I Proposal may be a good way to avoid bankruptcy and still repay your debts.


What is a Consumer Proposal? A Consumer Proposal is a legally binding agreement between you and your unsecured creditors that can only be prepared by a Licensed Insolvency Trustee like Bromwich & Smith. If the creditors agree to your proposed settlement plan, you must make the required payment to your Administrator, whether that is a lump sum, or periodic or monthly payment that you agreed to, until the settled amount is paid off. This must be done within five years. To be eligible for a Consumer Proposal, you must:

Avoid Bankruptcy

Consumer Proposal Details

1. An individual whose total debts do not exceed  $250,000.00, excluding mortgages on a principal residence, can make a consumer proposal to creditors. If the total debts exceed  $250,000.00 OR if you want bankruptcy to be the consequence of the failure of a proposal, then a Division I proposal can be filed.


2. A proposal may provide for an extension of time for payment, reductions in interest rates, repayment of less than 100 cents on the dollar, etc. A proposal must be made to all creditors generally. It must (in the case of a consumer proposal) be completed within five years and it must provide that preferred creditors (e.g. rent arrears, Trustee's fees) are paid before other creditors.


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