Who Qualifies for a Consumer Proposal?

If you’re struggling with debt in Canada, a consumer proposal might be a viable solution. This article will outline who qualifies for a consumer proposal, providing clarity on the eligibility criteria and the steps involved in the process.

What is a Consumer Proposal?

A consumer proposal is a legally binding agreement between you and your creditors, facilitated by a Licensed Insolvency Trustee (LIT). It allows you to settle your debts for less than you owe, giving you a manageable way to regain financial stability.

Key Eligibility Criteria

There are several factors that determine who qualifies for a consumer proposal. Examine these criteria to see if this could be the right solution for you:

Debt Amount

To qualify for a consumer proposal, your total unsecured debt must not exceed $250,000, excluding the mortgage on your principal residence. This includes credit card debt, personal loans, and other unsecured obligations.

Ability to Make Payments

While a consumer proposal offers reduced monthly payments, you still need to demonstrate the ability to meet these payments. Your LIT will assess your income, living expenses, and current financial situation to ensure you can adhere to the proposal terms.

Resident Status

Only individuals who are residents of Canada or have Canadian property can file a consumer proposal. This ensures that the protection and agreements are enforceable under Canadian law.

Income Parameters

Your income plays a crucial role in qualifying for a consumer proposal. You need to showcase a stable income source, enabling the restructured payment scheme to be feasible for you and acceptable to your creditors.

Steps to Filing a Consumer Proposal

Understanding who qualifies for a consumer proposal is just the beginning. Here’s a brief overview of the steps involved in filing one:

Consult a Licensed Insolvency Trustee

The first step is to meet with an LIT, who will evaluate your financial situation, check if you qualify, and help develop a proposal plan tailored to your needs.

Draft and Submit the Proposal

Your LIT will draft the consumer proposal and submit it to your creditors for approval. This includes proposing a reasonable payment plan that satisfies both your financial capacity and creditors’ expectations.

Creditors’ Meeting

Creditors have 45 days to accept or reject the proposal. If necessary, a creditors’ meeting may be conducted to discuss the terms. Approval generally requires a majority vote by your creditors.

Adhere to Payment Terms

Once approved, make timely payments according to the terms of your consumer proposal. Your LIT will monitor your compliance and manage the distribution of funds to your creditors.

Benefits of a Consumer Proposal

Choosing a consumer proposal offers multiple benefits, including:

• Avoiding bankruptcy
• Stopping interest accumulation on your debts
• Keeping your assets
• Gaining a structured and manageable payment plan

Conclusion

For Canadians wondering who qualifies for a consumer proposal, understanding the eligibility requirements and steps involved is crucial. If you meet the criteria, a consumer proposal might be the stepping stone to financial recovery you need. Consult with a Licensed Insolvency Trustee to explore your options and take the first step towards a debt-free future.

See if you qualify for debt relief