We will give you the disadvantages first. If a consumer proposal is wrong for you, it is better that you find out today, on this page, than eighteen months into one.

The disadvantages of a consumer proposal, plainly

It stays on your credit report. Three years after your final payment, or six years from filing, whichever comes first. That is years, not months. The rule is on the Financial Consumer Agency of Canada’s page.
Your unsecured credit is closed. Every card and line of credit in the proposal goes. That includes the ones with a zero balance at the same bank.
It is a public record. The Office of the Superintendent of Bankruptcy keeps a searchable insolvency database. Almost nobody looks. Anyone can.
You have to finish it. Fall three months behind and the proposal is annulled automatically. Your debts come back, with the interest that was frozen, and you have paid into something that no longer protects you. An annulled proposal can sometimes be revived, but not by default, and not on your say-so alone.
Your creditors can say no. A proposal is an offer, not a right. One creditor holding more than half the voting value can refuse it on its own.
It takes longer than a bankruptcy. Up to five years of payments, against nine months for a first bankruptcy with no surplus income. You are choosing the longer road to keep what you own.
You need income. The payment has to be carried every month for the whole term. No income, no proposal.
It does not cover everything. Secured debts survive it. So do support payments, most court fines, debts from fraud, and student loans where fewer than seven years have passed since you stopped studying.
There is a ceiling. Above $250,000 of unsecured debt, excluding the mortgage on your home, a consumer proposal is not the instrument.
Two counselling sessions are mandatory. It is a small thing, but people are surprised by it. The rules, including this one, are on the Superintendent’s page.

An example of the credit report rule: Say you pay your proposal out early, two years after filing. Three years after that final payment is year five. Year five comes before the six-year mark, so the record clears at year five.

How bad is a consumer proposal, really?

Compared with a clean credit report and no debt, it is bad. But that is not the comparison you are actually facing.

Your real comparison is with what is already happening to you: missed payments piling up, interest running, the collection calls, and the chance of a wage garnishment. None of that has an end date. Each account sent to collection sits on your report for six years from the first missed payment, on its own clock. A proposal is worse than being debt free and better than a problem with no end. The honest question is which of those two your situation looks like.

What not to do before a consumer proposal

This is where people hurt themselves, usually with good intentions.

Do not move an asset. Putting the car in your brother’s name or the savings in your spouse’s account does not protect it. A transfer made to keep something away from creditors can be reversed, and it colours the whole file.
Do not pay one creditor ahead of the others. Paying off your mother’s loan or your favourite card the month before you file is a preference, and it can be undone.
Do not run up the cards. A balance built in the weeks before a filing is the first thing a creditor looks at when it decides how to vote.
Do not guess on the forms. How you answer the questions is very important. Take the inheritance question: some people write “yes” on a guess, without knowing what is in the will. Answer truthfully, with what you actually know. If you are not sure what a question is asking, ask first.

The advantages, since they are real too

The payment is fixed. It is agreed at the start, and it does not go up if your income does. In a bankruptcy the payment is recalculated against your income, so a raise or a bonus increases what you pay.
You keep your assets. Your home equity, your vehicle, your savings. Protecting those is usually why people choose it.
Interest stops on the day it is filed. So does most legal action, including a wage garnishment that is already running.
It is not bankruptcy, and it clears your credit report sooner.
You can pay it out early with no penalty, which moves your credit report date forward.
The cost is inside the payment. The fees for administering it are set by federal tariff and come out of what you are already paying, not on top.

When a consumer proposal is the wrong answer

We would rather tell you when your situation points somewhere else.

There is no income to repay from. A proposal is a repayment plan. Without income it is the wrong tool, and bankruptcy is likely the honest answer.
The debt is small. Below roughly ten thousand dollars, with income, there are usually simpler routes that cost you less.
You could clear it in a couple of years anyway. Then the credit report cost is not worth paying.
Almost all of it is secured or non-dischargeable. A proposal cannot compromise what it cannot include.
You are about to renew a mortgage with a lender that will not renew during a proposal. That is a timing question, and it is worth asking before you file rather than after.

Is a consumer proposal a good idea? The pros and cons together

It is worth it when you have income, you have assets you want to protect, and you face a balance you cannot realistically clear on the terms you are on now. It is not worth it as a way to avoid a conversation you have been putting off. And it is not worth it if a simpler route would work. The side-by-side with bankruptcy is on our consumer proposal or bankruptcy page.

Every file is different. Your buddy’s proposal is not yours. How you answer the questions on the forms matters too. Understand each question before you answer it, answer it truthfully, and ask us when you are not sure what it is asking.

Questions people ask

What is the catch of a consumer proposal?

There is no hidden one. The catch is on this page: the credit mark, the closed cards, the public record, the years of payments, and the fact that a creditor can say no. If someone tells you there is no downside, they have not read the file.

Can I keep my credit card?

Not one that is in the proposal, and usually not one from a bank that is. A card from a bank you owe nothing to is sometimes kept. Ask before you file. Our page on your credit during and after a proposal goes through it.

Is it private?

No. It is a public record in the federal insolvency database. It is not published anywhere, and your employer is not told, but anyone who pays the search fee can find it.

What happens if I miss payments?

Three months behind and it is deemed annulled. The stay ends, the debts come back with the interest that had been frozen, and the payments you made count against what you owed but buy no further protection. If money gets tight, say so before the third missed month, not after it.

Where we fit

Get Total Debt Relief is a debt consulting and representation firm, not a Licensed Insolvency Trustee. Only a Licensed Insolvency Trustee can file your documents for a consumer proposal or a bankruptcy with the Superintendent of Bankruptcy. What we do is the work before the filing: we go through your whole situation with you, we answer your questions for as long as it takes, and the path you choose comes from that.

If a proposal is wrong for you, we would rather say so at the start. You can read more about proposals and bankruptcy.

DISCLOSURE:

Get Total Debt Relief is a debt consulting and representation firm. We are not a Licensed Insolvency Trustee, and we are not connected to the Canada Revenue Agency or any government body.

Only a Licensed Insolvency Trustee can file your documents for a consumer proposal or a bankruptcy with the Superintendent of Bankruptcy.

OUR SERVICE:

However, any Trustee you choose can’t legally represent you over your Creditors nor can he give you any advice that will benefit you over your Creditors. The Trustee’s job is to maximize how much he can get from you and your estate for the benefit of your Creditors and the more he collects in a Proposal, the more he makes.

What we do is the work before the filing and the path you choose will come from the advice and information that goes with it. More importantly, we use tools that are not available to the Trustee because of who’s interests he represents. We go through your whole situation with you. We answer your questions, for as long as it takes and as many times as you need to ask them. Every consultation is free and if or when you decide to move forward, you’ll know which option best suits you, your family and or your business. And, unlike the Trustee, we will NEVER use the information you’ve given us against you in Court. The bottom line is that we don’t look to liquidate your assets and equities, we look to protect them.

Every consultation is free, and you can call as many times as you need. Call 647-276-8844 or talk to us.