Proposals

What is a Consumer Proposal?

A consumer proposal is a simplified form of proposal designed for individuals with smaller debts.

It allows ordinary citizens who are unable to pay all their debts in full to make a formal repayment plan through a licensed trustee, rather than declaring bankruptcy.

Key features of a consumer proposal under the Act and Regulations include:

• It applies to natural persons only (not companies).
• The total debts, excluding any mortgage secured on the debtor’s home, must not exceed the prescribed threshold (set in the Regulations).
• It must be filed through a licensed trustee, who reviews its reasonableness and supervises the process.
• Once accepted by creditors and approved, the debtor makes affordable payments over a fixed period (usually up to five years).

This process gives individuals a second chance — to repay what they can, protect their essential assets, and avoid the stigma of bankruptcy.

A debtor must work with a licensed trustee, who assists in preparing the proposal, assessing its reasonableness, and submitting the required forms and statements to the Supervisor of Bankruptcy and Insolvency.

How to File a Proposal or Consumer Proposal

The procedure follows specific steps set out in the Act and Regulations:

1. Consult a Licensed Trustee

The process begins with a consultation. The trustee will assess the debtor’s financial situation, prepare a cash flow statement, and ensure that the proposal is reasonable and in compliance with the law.

2. Prepare and Submit Required Documents

According to the Regulation, the debtor must file:

• A Proposal Form (Forms as applicable);
• A Cash Flow Statement prepared by the debtor and reviewed by the trustee;
• A Report on the Reasonableness of the Cash Flow Statement prepared and signed by the trustee; and
• A Report by the Debtor confirming the accuracy of the information provided.

3. Filing with the Supervisor

The trustee submits the proposal package to the Office of the Supervisor of Bankruptcy and Insolvency (OSBI).

Once filed, the proposal is deemed officially made, and all creditor actions — such as lawsuits or collections — are automatically stayed while the proposal is under consideration.

4. Notice to Creditors and Meeting

The trustee must send notice of the proposal to all creditors and call a meeting of creditors within the prescribed period (usually 21 days) to vote on whether to accept or reject the proposal.

5. Approval and Implementation

If the creditors approve the proposal by the required majority and it is not refused by the Court, it becomes binding on all unsecured creditors.
The debtor then makes payments through the trustee, who distributes them to creditors.

6. Completion and Discharge

Once all payments are made according to the proposal, the debtor is legally released from the debts covered by the proposal.