Consumer proposal: private financing

What is a Consumer Proposal?

A consumer proposal is a legal agreement between a debtor (the person in debt) and their creditors. It allows for the reduction of the total debt amount and the establishment of a repayment plan that is more manageable based on the debtor’s financial capacity. In return, the debtor agrees to follow this repayment plan, which enables them to avoid bankruptcy and preserve their assets (house, car, etc.).

Why Choose a Consumer Proposal?

A consumer proposal differs from bankruptcy through several key advantages:

Debt Reduction: Creditors agree to reduce the total amount to be repaid.
Asset Protection: Unlike bankruptcy, the debtor’s assets are protected.
Credit Score: Although it impacts the credit score, it is reported as R7 (payment arrangement), which is less severe than bankruptcy (R9).
Suspension of Interest and Legal Actions: Once the proposal is accepted, creditors stop all legal proceedings and suspend interest on the debts.

How a Consumer Proposal Works

The consumer proposal process follows several key steps:

Initial consultation with a Licensed Insolvency Trustee : The process begins with an assessment of your financial situation. The trustee reviews your debts, income, and assets to determine whether a consumer proposal is the best option.
Preparation of the repayment offer : The trustee prepares an offer based on your repayment capacity. This offer generally includes a reduction of the total debt amount and proposes a repayment schedule over a period of up to five years.
Submission of the offer to creditors : Once the offer is finalized, it is submitted to creditors for approval. They have 45 days to accept or reject the proposal. If the majority of creditors accept, the agreement becomes binding on all.
Payments and obligations : You make regular payments according to the terms of the agreement. During this period, you must also attend two financial counseling sessions to better manage your finances.

The consumer proposal offers a viable path to restructure your debts. By integrating a private loan into this strategy, you can benefit from more favorable terms and quick access to the funds needed to stabilize your financial situation. Whether you are facing pressing financial obligations or simply looking for a more flexible way to manage your debts, an individual loan may be the ideal solution for you.