What happens during the consumer proposal process?

Consumer proposal process: Once you’ve signed the legal paperwork for the consumer proposal, your trustee will file an electronic version of these documents with the Office of the Superintendent of Bankruptcy (“OSB”). The documents are filed electronically through the internet directly to the OSB, which will instantly send to your trustee a Certificate of Filing Consumer Proposal.

The Certificate of Filing Consumer Proposal indicates that your trustee has been appointed by the OSB as the administrator of your consumer proposal, as well as the date and time the proposal was filed. Once the Certificate of Filing Consumer Proposal is issued, you have legally filed a proposal.

It is important to note that filing a consumer proposal does not extinguish your debts – it only prevents your creditors for continuing any legal action against you to collect their debts. Your debts are legally extinguished only when you’ve completed your proposal by completing proposal payments.

Notice of proposal

Upon being appointed, your trustee will send to your creditors a notice of your proposal. Upon receiving this notice, your creditors cannot commence or continue any actions to collect their debts from you.

Counselling sessions

You will be required to attend two credit counselling sessions. The first session will take place about 2 months into your proposal.

In the first stage, the qualified counsellor shall present information to provide you with advice in the areas of:

  • money management;
  • spending and shopping habits;
  • warning signs of financial difficulties; and
  • obtaining and using credit.

The second counselling session will take place about 7 months into your proposal. The purpose of that session is to follow-up on what you’ve learned in the first session to assist you to better understand  your strengths and weaknesses with regards to money management and budgeting skills.

It should be noted that attendance at these sessions is mandatory. If you haven’t attended both sessions, you will not have completed your proposal, even if you made all your proposal payments.

Attend meeting of creditors

You may be required to attend a meeting of your creditors if requested by either the trustee, a representative of the Office of the Superintendent of Bankruptcy or your creditors. The most common reason a meeting is held is because your creditors have requested such a meeting in order to discuss amendments they’d like to see in your proposal as a condition of them accepting it.

If such a meeting is held and the majority of your creditors have voted against the proposal you filed and you’re unwilling to consent to the amendments they’re requested (they’re usually asking for more money), then the proposal won’t be approved. In this event, your creditors are no longer subject to a stay of proceedings and can recommence actions against you to collect their debts.

However, if no such meeting has been requested within 45 days after your proposal was filed, then your proposal is deemed to have been legally accepted by your creditors.

Making your proposal payments

Once your proposal has been accepted, you will be expected to make your proposal payments on time. If during the course of your proposal your payments fall 3 months in arrears, your proposal will be deemed annulled. In this event, your creditors are no longer subject to a stay of proceedings and can recommence actions against you to collect their debts.

Obtaining your Certificate of Completion

Once you’ve fulfilled the obligations described above, the trustee will issue to you a Certificate of Completion of Consumer Proposal. The balance of your debts will be legally extinguished (with certain exceptions) and you are debt free.

How are fees paid in a consumer proposal? »