Understanding Consumer Proposals in Quebec: A Guide

Understanding Consumer Proposals in Quebec: A Guide

In Quebec, as in the rest of Canada, a consumer proposal is a legal process that provides individuals with a way to settle their debt for less than they owe. It’s a viable alternative for those who are struggling to keep up with their debt payments, offering a way to avoid bankruptcy, while still working towards becoming debt-free. This guide will delve into what a consumer proposal is, how it works, and what you need to know if you’re considering this debt relief option in Quebec.

What is a Consumer Proposal?

A consumer proposal is a legally binding agreement facilitated by a Licensed Insolvency Trustee (LIT), between an individual (the debtor) and their creditors. It allows the debtor to retain their assets while repaying a portion of their debts over a period of up to five years. The exact amount to be repaid is negotiated with the creditors, and once the proposal is accepted, all interest charges on the debts are frozen.

Benefits of Filing a Consumer Proposal in Quebec

Filing a consumer proposal offers several benefits, including the ability to:

• Consolidate multiple debt payments into one manageable monthly payment.
• Stop all collection calls, wage garnishments, and legal actions taken against you by your creditors.
• Pay back only a portion of your total debts without interest accumulating on them.
• Keep your assets, including your home and car, which might not be possible in a bankruptcy.

How to File a Consumer Proposal in Quebec

To file a consumer proposal in Quebec, you need to work with a Licensed Insolvency Trustee. The process typically involves:

1. Initial Consultation: Meeting with a LIT to discuss your financial situation and explore all possible debt relief options.
2. Preparing the Proposal: If a consumer proposal is deemed the best solution, the LIT will help you draft an offer to your creditors that details how much you can afford to repay.
3. Filing the Proposal: The LIT will file the proposal with the Office of the Superintendent of Bankruptcy, automatically triggering a stay of proceedings. This halts most legal actions against you by creditors.
4. Creditor Response: Creditors have 45 days to either accept or reject your proposal. If the majority in dollar value of your creditors accept it, all are bound by its terms.
5. Fulfilling the Proposal Terms: Once accepted, you will make the agreed-upon payments through your trustee, who will then distribute these funds to your creditors.

Eligibility for Filing a Consumer Proposal

To be eligible for a consumer proposal in Quebec, you must:

• Be insolvent (unable to meet your financial obligations as they come due).
• Owe between $1,000 and $250,000, excluding the mortgage on your principal residence.
• Have a stable source of income to make the monthly payments proposed to your creditors.

Conclusion

A consumer proposal can be a powerful tool for resolving financial difficulties and avoiding bankruptcy in Quebec. It allows individuals to settle debts under new terms, potentially offering relief from overwhelming debt. However, it’s important to carefully consider if it’s the right option for your situation and to consult with a Licensed Insolvency Trustee to explore all available debt relief solutions.