Consumer Proposal in Scarborough, Ontario

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Selecting the Right Debt Solutions Professional in Scarborough, Ontario

For many Canadians, managing debt presents a significant challenge, often resulting from unforeseen circumstances such as job loss, emergencies, or economic downturns. This financial strain can place immense pressure on individuals, creating a sense of being trapped in an unending cycle of financial hardship. When considering options like debt consolidation, which requires repayment of the entire debt, or bankruptcy, which carries risks regarding asset retention, an Scarborough consumer proposal emerges as an appealing alternative for addressing financial difficulties.



Understanding the Consumer Proposal Process

A consumer proposal is a federally regulated, legally binding process overseen by the Office of the Superintendent of Bankruptcy. It serves as a viable alternative to personal bankruptcy, requiring the expertise of a Licensed Insolvency Trustee (LIT) for filing, similar to bankruptcy proceedings. One of the most notable advantages of a consumer proposal is the potential reduction of debt repayment by up to 80%.

Upon initiating a consumer proposal, individuals consult with a Licensed Insolvency Trustee (LIT), who thoroughly assesses their financial situation to determine the suitability of a consumer proposal. If deemed appropriate, the LIT prepares the proposal, outlining the proposed debt repayment amount and associated terms, including monthly payments and duration.

Following the filing of the consumer proposal and its submission to creditors for approval, all legal actions against the debtor, such as collection calls or wage garnishments, cease. Upon creditor acceptance, the proposal takes effect immediately, with the debtor making monthly payments to the LIT for distribution among creditors. Upon fulfillment of all payment obligations, any remaining debt is discharged.

Understanding the Scope of a Consumer Proposal

A consumer proposal encompasses most unsecured debts, excluding debts secured by assets such as mortgages or car loans. Typical debts included in a consumer proposal may consist of:

  • Credit card debt
  • Personal loans (including lines of credit, consolidation loans, or renovation loans)
  • Payday loans
  • Student loans (if no longer attending school for at least seven years)
  • Income tax debt (encompassing personal income tax, GST debts, Canada Child Benefits overpayments, CPP, and OAS overpayments)


Is a Consumer Proposal Right for Me?

A consumer proposal may be suitable if:

  • Total debt is less than $250,000 (excluding primary residence mortgage)
  • Insolvency prevents meeting monthly obligations
  • Relief from wage garnishments, collection calls, and accruing interest is needed
  • Assets requiring protection may not be safeguarded in bankruptcy

Exploring Alternative Debt Relief Options

In addition to consumer proposals, alternative debt relief options include:

  • Bankruptcy: Administered by a Licensed Insolvency Trustee, bankruptcy involves surrendering assets (with exceptions) and discharging debts after 9 or 21 months.
  • Debt Management Plan (DMP): A credit counsellor facilitates a DMP that entails negotiating repayment plans with creditors, typically spanning three to five years.
  • Consolidation Loan: Involves combining multiple debts into a single loan, simplifying repayment but requiring application and qualification.
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See What Your Debt Repayments Might Look Like

Our debt calculator provides a comparison of what your monthly debt repayment might look like under different debt relief options including a debt consolidation loan, debt management plan and consumer proposal



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