Is A Consumer Proposal A Good Idea?

Posted on 23 April 2019

Looking for an affordable debt solution?

At Spergel, we offer customized debt solutions that allow you to reduce your debt, as well as the stress and worry about your financial future. Our knowledgeable teams are dedicated to giving you the personalized care you need from the moment you call us until you have achieved your goal of debt freedom.

While you may have the ability to pay some of your debts, if you are unable to afford making your payments in-full, a consumer proposal may be the perfect debt solution.

What is a Consumer Proposal?

A consumer proposal is a debt relief solution that allows you to significantly reduce your debt and repay a portion without interest, while keeping your assets. It is a legally binding repayment plan with an offer to pay back a percentage of what is owed to your creditors, but at a fraction of what is owed. Many of our clients are able to reduce their debts by as much as 80%, or, approximately 30 cents to a dollar. In short, you can save a substantial amount of money. A consumer proposal in Ontario can also extend the time you have to pay your debts and offers creditor protection. Every consumer proposal will ensure:

  • Your debts are reduced up to 80%
  • An immediate freeze is placed on debt interest
  • You are able to keep your assets (i.e. home equity)
  • Your debts are consolidated into one affordable monthly payment
  • Wage garnishments are stopped
  • All collection calls are stopped

A consumer proposal is a legally binding debt settlement plan administered by a Licensed Insolvency Trustee (LIT) in Ontario. If you have up to 250,000 in debt, not including a secured mortgage, a consumer proposal could offer you an opportunity to pay back your debts for less than you owe.

What debts are included in a Consumer Proposal?

A consumer proposal does NOT affect your mortgage or secured car loan.

How does a consumer proposal work?

In your first appointment, a knowledgeable Spergel Licensed Insolvency Trustee will review your personal financial circumstances and determine how much to offer your creditors. As part of this first step, we will assess the amount of your debt, who you owe money to, your assets, income, and family size. With this information, we determine three important factors that set the parameters for negotiation:

  • What the amount is that your creditors would expect receive if you were to file for bankruptcy.
  • What the minimum payout amount is that your creditors might expect as a minimum payout.
  • What the amount is that you can personally afford to pay each month.

Working together with your Licensed Insolvency Trustee, we will develop a debt repayment plan that is affordable for you and agreeable for your creditors. Your monthly payments are determined through a negotiation process between the amount your creditors expect to receive and the amount that you are financially able to pay. As a result, the agreed upon payments are typically much lower than any other debt relief alternatives. As part of this proposal, you would agree to repay the remaining debt in equal monthly payments over a three to five year period. The Trustee’s fees are also included in the monthly repayment amount.

Who makes the negotiations?

When a consumer proposal is filed, your Licensed Insolvency Trustee negotiates with creditors on your behalf in order to reduce the amount of debt you owe and stop interest charges.

  • Once a consumer proposal is drawn up that you can afford, based upon your earnings, assets, debt and family size, your proposal will be filed with the Office of the Superintendent of Bankruptcy (OSB).
  • Immediately upon filing, direct payments to your unsecured creditors are stopped. In addition, if your creditors are garnishing your wages or have lawsuits filed against you, these actions are also stopped.
  • Next, the LIT will submit the filed consumer proposal to your creditors. Included in this document, will be a report on your individual circumstances and the cause(s) of your financial difficulties.
  • Upon submission, your creditors have 45 days to accept or decline the consumer proposal. The outcome is based on a majority vote and even if one of your creditors declines he/she must still abide but the majority ruling.

Another significant advantage of a consumer proposal in Ontario, over credit counseling and other debt programs, is that once accepted, your proposal is binding on all creditors. This stipulation applies to Revenue Canada and any lenders who do not participate in informal debt settlement programs. Also, not every single creditor has to agree to the proposal. If the majority of your creditors vote in favor of the proposal, it is binding to everyone (each dollar owed represents one vote). This means all your debts will be eliminated. You will not be left with one outstanding debt to take care of.


Is there always a meeting of creditors?

A meeting of creditors is not always necessary. A request for a meeting must be made by the creditor(s) within 45 days of the proposal’s filing. An OSB can also instruct the LIT to call a meeting of creditors. The meeting must be held within 21 days from the request. In this meeting, the creditors will vote to accept or reject the proposal. Regardless of creditor objection, if a meeting of creditors is not requested within 45 days of the proposal’s filing, the consumer proposal is legally deemed as accepted by the creditors.

If your consumer proposal is accepted, you are:

  • responsible for paying the LIT either single monthly payments, or, a lump sum
  • able to retain your assets, provided the agreed-upon payments are made
  • required to attend two financial counseling sessions
  • required to adhere to any other conditions which may be outlined in your proposal

Who can qualify?

We recommend meeting with a Spergel Licensed Insolvency Trustee to determine if a consumer proposal is the best option for you. We meet with people every day who are in need of debt relief and are looking for the opportunity to repay as much of their outstanding debt as they can afford, while retaining their assets.

There are specific federally regulated requirements that you must meet. An individual must meet the following criteria in order to be eligible to file a consumer proposal in Ontario with Spergel:

  • You must have the ability to pay a portion of your debts
  • Your debts must be greater than the value of what you own
  • Your debt must not exceed $250,00 (not including a mortgage and car loan)
  • You must be able to make monthly payments, or one lump sum payment, or have a third-party guarantee your payments

The good news is, most unsecured debts CAN be eliminated by a consumer proposal!

Is a Consumer Proposal worth it?

Consumer proposals are the #1 debt solution in Canada.

  • A consumer proposal allows a person with significant debt to avoid more serious action, and it gives honest hard working people the satisfaction of knowing they repaid their debts to the best of their financial ability.
  • A consumer proposal is also one of the simplest options to guarantee immediate protection from your creditors.
  • You will not be obligated to make payments that are more than your income allows.
  • You also repay less than what you owe to creditors and, once accepted, all creditors are legally bound by the terms.

A consumer proposal makes sense if:

  • You require debt relief from debts under 250,000
  • You would like to keep your assets
  • Your income is high enough that you would be required to make large surplus payments in the case of bankruptcy
  • You work in a profession that requires disclosure of bankruptcy
  • You wish to avoid bankruptcy

It is important to note that credit councilors and unlicensed debt consultants cannot legally provide consumer proposal services. According to Canadian law, consumer proposals can only be filed with a Licensed Insolvency Trustee (LIT). All they can do is refer you to a trustee licensed by the federal government. With Spergel, no referral is needed.

Here’s how to get started!

For over 30 years Spergel has helped more than 55,000 residents of Ontario, burdened with debt, get a fresh start with solutions including consumer proposals. When you schedule a free consultation with one of our LITs, they will evaluate your financial situation and discuss with you the various alternatives to help you solve your unique financial circumstances. We guarantee:

  • All INITIAL consultations with our licensed experts are free
  • We will meet with you as often as you need
  • We are dedicated to finding a debt solution you can afford
  • We have a 99% acceptance rate for consumer proposals we file
  • There are no additional fees or interest charges

As a Licensed Insolvency Trustee regulated by the Office of the Superintendent of Bankruptcy Canada, we provide expert support to explain all your debt relief options, including credit counseling, debt consolidation, debt settlement, consumer proposals and personal bankruptcy.

Call Spergel today 1-877-501-4321 to discuss your needs with one of knowledgeable Licensed Insolvency Trustees. We are here to listen to your debt story and help you become debt free. Finding our nearest office is as easy as one click. You owe it to yourself!

Helpful starting information:

What to Bring to an Appointment

To get the debt help that you need, please bring a list of who you owe and how much to each, a list of everything you own and your monthly household budget. Don’t have everything right away? Don’t worry – We will guide you through each step.

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Your Information

We’ll walk you through our application process. But, if you want to prepare for your debt free assessment consultation in advance, download our information form and fill in what you can.

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How can you compare your debt repayment options if you don’t know how much they will cost you? Your solution will become much clearer when you are able to compare costs.

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Ready to Be Debt-Free?

If you’re ready to be debt free, it’s time to meet with one of our knowledgeable Licensed Insolvency Trustees at your convenience and get started

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