Consumer Proposal Process in Calgary

Calgarians have the advantage of a whopping 333 days of sunshine every year. When enjoying the view of the Calgary Tower or spending time at the Calgary Zoo, your experience may be clouded by the stresses of your financial debts. You don’t have to go through the burden of seeking debt relief on your own. You might consider filing a consumer proposal in Calgary as a beneficial way to pay off your debt, and stop harassing phone calls from your creditors.

    What Is a Consumer Proposal?

    Consumer proposals are an effective way for individuals to get out of their financial debt. For those who don’t know, a consumer proposal is a binding legal agreement between a debtor and their creditors. Only Licensed Insolvency Trustees can arrange and administer a consumer proposal for you. 

    The point of a consumer proposal is to reduce the amount of debt you’re carrying while also allowing you to keep your assets, such as RRSPs, GST credits, and tax refunds. During the consumer proposal process, your creditors will vote on whether they reject or accept the terms of the agreement. If accepted, you will pay back a portion of your debt with zero interest. Unlike a debt consolidation loan, a proposal adds legal protection to keep you safe from creditors during the entire process.

    You will have up to five years of monthly payments that will go through your Licensed Insolvency Trustee. Your Insolvency Trustee will then distribute the money toward your creditors. Once the agreed-upon amount is paid, your creditors will eliminate the rest of the debt you owe. 

    When filing a consumer proposal, there are some specific responsibilities you will be tasked with:

    • You must provide a complete list of your assets and liabilities to your trustee. 
    • Attend the meeting of creditors if a meeting has been requested. 
    • Pay a lump sum or periodic payments to your trustee.
    • Follow all the conditions made in the consumer proposal.
    • Attend two credit counselling sessions in-person or online by video conferencing. 
    • Advise the LIT of any changes to your financial situation. 

    The Advantages & Disadvantages

    A consumer proposal in Calgary offers some advantages and disadvantages to those considering it. These may include:


    • Your debt can get significantly reduced.
    • It will stop the active collection of student loan payments.
    • It allows you to avoid declaring bankruptcy. 
    • It can be an effective method if you can afford to make periodic payments. 
    • A beneficial alternative to debt consolidation loans.


    • Consumer proposals will be on a permanent public record. 
    • Creditors can reject your consumer proposal.
    • Missing three or more payments may mean you have to file for bankruptcy. 
    • Student loans that are less than 7 years old cannot be wiped out by the proposal – they will still exist even once your proposal is paid off.
    • Secured debts aren’t included. 
    • A consumer proposal will impact your credit.

    How Does a Consumer Proposal Affect My Credit?

    Entering a consumer proposal can affect your credit rating and remain on your credit report for 6 years from the date you filed. If you’re able to pay off your proposal sooner, the length of time can decrease on your report. 

    Once your proposal payments are complete, you can expect to see an R7 credit rating on your report, meaning that creditors have received payments on their accounts through a third party (your LIT). Any payments made to secured creditors outside your proposal, such as a car loan, will be reported as separate debts. If you can balance your payment history on a secured debt while staying up-to-date on your proposal payments, you will be able to rebuild your credit.

    Avoid Getting Ripped Off

    First and foremost, only a LIT can is allowed to file consumer proposals. Lately, many for-profit companies and credit counsellors are abusing the needs of unsuspecting consumers. These companies will charge you extra fees only to refer you to a trustee that you could have consulted with for free. This will not help your financial debt situation.

    Always remember that you should only submit payments to a LIT when moving forward with a consumer proposal. The law states that they are the only ones able to provide these services and receive payment in return. 

    If you’re looking to get out of your debt quickly and efficiently, consumer proposals can be very helpful. To learn more about our debt relief services, make an appointment for your free consultation today. We have many years of experience, and can provide you with the proper financial assistance and advice.


    What Happens When You File a Consumer Proposal?

    Your Licensed Insolvency Trustee will file the proposal with the Office of the Superintendent of Bankruptcy (OSB). After filing, any payments you have to make with your creditors will be halted. If there are any legal actions relating to the debt you may be facing, they will be stopped as well.

    A report will be submitted to the creditors, which outlines your situation and the cause of your debt problems. The report will include your LIT’s opinion on whether the proposal should be accepted.

    How Much Debt Do You Need for a Consumer Proposal?

    To file for a consumer proposal, you must owe at least $1,000 in unsecured debt to qualify. It’s important to know how much you have in total debt. To qualify as a single individual, the maximum debt that you can have is $250,000. As for married couples, you can owe up to $500,000 together.

    Do Most Consumer Proposals Get Accepted?

    When a proposal is filed, your creditors will have 45 days to vote on whether they accept or reject the consumer proposal. If there’s no meeting of creditors requested, that means that the proposal will be accepted by the creditors and binds all of those creditors under the consumer proposal terms, even those that didn’t vote before the deadline.

    For a meeting of creditors to be held, creditors owed at least 25% of the total value of the proven claims, as filed on the 45th day after the initial proposal was filed, must request a meeting. LITs can also be directed by the Office of the Superintendent of Bankruptcy (OSB) to call for a meeting of creditors during the same time frame. A meeting of creditors must be held within 21 days after being called. The creditors will then vote to either accept or reject the proposal, or request that you make a change to the proposal terms. If the majority of the creditors vote to accept the proposal either as it was originally filed, or following a change to the terms, then the proposal will have been approved. 

    If the consumer proposal was not accepted, you may also have to consider other debt consolidation options or declare bankruptcy.

    What Is the Difference Between Consumer Proposal & Bankruptcy?

    A consumer proposal is a binding agreement made between you and your creditors. This proposal is administered by an LIT, who helps negotiate the terms of your debt repayment. The legally binding agreement protects you from debt collectors and can freeze the accumulated interest. 

    Bankruptcy is a legal process that relieves you of the debts you’re facing in your financial situation. You can get a free consultation with an LIT to go over your debt-relief options; in this appointment, a Trustee will discuss if bankruptcy might be your best option. Filing for bankruptcy will show on your credit history for six years following your discharge from the process, but the process of bankruptcy can be accomplished in as little as nine months.

    There are some differences involved between these two alternatives, such as:

    • With bankruptcy, you will have to submit monthly reports on your income and expenses. Consumer proposals don’t require any reporting duties.
    • Consumer proposals allow you to keep all of your assets, while bankruptcy may require you to surrender any non-exempt assets.
    • The duration varies for these two debt solutions, with consumer proposals taking up to 5 years and bankruptcy taking as little as 9 months. 
    • The cost associated with consumer proposals is covered as you make your monthly payments. If you’ve declared bankruptcy, the cost involved will depend on your average monthly income, and is calculated specifically for each case. 
    • Consumer proposals will show for no longer than 6 years on your credit score (sometimes less), where bankruptcy can remain on your history for 6-7 years.

    Will a Consumer Proposal Affect My Credit Rating?

    If you’ve filed a consumer proposal, it will show on your credit report. The proposal will be removed after three years from the date you have completed the proposal or six years from the date it was filed, whichever comes first.

    What Happens If You Miss Payments on a Consumer Proposal?

    Consumer proposals allow you to make monthly payments. If you were to miss three payments, or your payment is three months past due, the proposal will be annulled. When annulled, the agreement made on paying your debts will cease, allowing your lenders to once again be able to collect the money you owe them.

    What Happens When the Consumer Proposal Is Satisfied?

    When the conditions involved in your consumer proposal are satisfied, you will be released from the debts included in the proposal. You won’t be required to pay anything further on your debts. You will then receive a certificate of full performance. 

    Seeking debt relief can be a difficult task, especially if those debts are weighing you down. No matter how hard of a struggle it can be, we assure you that there are debt solutions available to assist you. Make an appointment for a free consultation today, and we can see if a consumer proposal is the right option for you.