0038 - Debt Related Queston: Bankruptcy Question # 0038
I’ve read about “Consumer Proposals” on the Internet but I can’t figure out what that means. The news and information online state that changes to the Bankruptcy and Insolvency Act will affect consumer proposals. Could you explain?
A consumer proposal is a legal procedure that allows a debtor to repay all or part of their unsecured debt in a manageable fashion. Payment to a trustee for the benefit of the creditors can be in a lump sum offer, or monthly payments. If the majority of your creditors accept the terms of your Consumer Proposal, then it becomes legally binding. Once accepted, you pay amount as set in the Proposal. No interest charges are added. When all the provisions of your Consumer Proposal are complete a Certificate of Completion is issued and the balance of the debts are discharged. Changes to the Act will come into force sometime this year. The debt cap for consumer proposals is being raised from $75,000 to $250,000. This change will speed up the process for individuals with debts over $75,000 by eliminating the court processing and other requirements of a Division I Proposal.