How to File a Consumer Proposal

Step 1: Meet with a Licensed Insolvency Trustee for a Debt Assessment

Before you can file a consumer proposal in Ontario, Canada, you must meet with a Licensed Insolvency Trustee (LIT) so that the LIT can learn about your debt problems and explain all the debt relief options that are available to you.

At the end of this debt assessment, if a consumer proposal is selected as the most effective debt solution, the LIT will develop a personalized debt repayment plan based on your income, assets that you own and your total debts.

Step 2: Prepare and Sign the Consumer Proposal Documents

Once the LIT has received supporting documents from you, the LIT will prepare the various consumer proposal documents. A meeting will be set up to go over and sign the formal consumer proposal documents.

Step 3: File Consumer Proposal Documents and Notify Creditors

Once signed, the LIT will electronically file the consumer proposal documents with the Official Receiver and a Certificate of Filing of a Consumer Proposal will be issued. Your consumer proposal is now “official” and there is an automatic stay of proceedings which provides the legal protection against your creditors. This means that creditors can no longer call and harass you, cannot continue or commence legal actions against you and can no longer garnishee your pay/wages.

Once the consumer proposal is filed, the LIT will notify your creditors by sending them a creditor’s package. When they receive the creditor’s package, they know that they are no longer permitted to contact you and that they must work with the LIT. The creditor’s package will have many of the documents that you signed along with the notice of filing, proof of claim, proxy and voting letter.

Creditors have 45-days to let the LIT know if they will accept the consumer proposal as filed or, if they reject the initial offer, they will submit a (higher) counter offer for them to accept the consumer proposal.

After the 45th day, if the majority of the creditors accept the consumer proposal as filed, it is deemed to be accepted by all your creditors and a meeting of creditors is not required.

If after the 45th day, more that 25% of the proven creditors reject the initial offer, the LIT is required to call a First Meeting of Creditors. This meeting can be to discuss the proposal and ask questions, however, more often than not, it is to discuss a (higher) counter offer.

Step 4: Completing the Consumer Proposal

Once creditors have accepted your proposal, you will continue to make the monthly proposal payments and complete the two credit counselling sessions.

Step 5: Certificate of Full Performance

After the final consumer proposal payment has been made, the LIT will issue the Certificate of Full Performance of Consumer Proposal which confirms that the terms of your proposal have been completed and your debts are now discharged. Congratulations! You are now debt free.

The LIT will file the Certificate of Full Performance with the Office Receiver, who will notify the two main credit bureaus (Equifax and TransUnion) of the completed consumer proposal. The credit bureaus will update their records with a note that the proposal is completed.

The LIT will notify your proven creditors of the proposal being completed by sending them the Final Statement of Receipts and Disbursements along with the final proposal payment.