WHAT IS A PROPOSAL
A proposal is a settlement offer presented to all of your creditors who do not hold a lien or guarantee on your property (for example: a mortgage, a conditional sales contract, a lease agreement). The amount of money offered is payable over a period of time that may vary between one and sixty months, all without any interest. This proposal process can only be administered under the supervision of a bankruptcy trustee whose responsibility it is to negotiate with your creditors and to protect you against all legal proceedings. This option has the advantage of allowing you to keep all of your assets.

THE ROLE OF THE TRUSTEE
Following an evaluation of your financial situation by the trustee, he will discuss, suggest and recommend a proposal that could be presented to your creditors. Once filed, the trustee will be charged with discussing and negotiating the proposal with your creditors. The proposal will be prepared, taking into account, among other things, your income and expenses and can be formulated in many ways. For instance, the proposal may offer monthly payments over a given period which cannot exceed sixty (60) months or, in an other instance, one single payment.

The trustee will send to every creditor a copy of the proposal and his report as to whether in his opinion; the proposal is reasonable and fair with respect to the debtor and the creditors. The creditors will then have 45 days to study the proposal, and decide whether to accept or refuse the proposal or to negotiate an amendment.

THE EFFECT OF A CONSUMER PROPOSAL
As provided for in the Act, the filing of a consumer proposal has the following advantages:

• To suspend all legal proceedings filed against you;
• To prevent the voiding or modifying of a contract solely on the grounds that you are insolvent or that you have filed a consumer proposal;
• To prevent a creditor from taking advantage of an acceleration clause solely on the grounds that you are insolvent or that you have filed a consumer proposal;
• To prevent a public utility from interrupting its services;
• To prevent an employer from firing, suspending, or laying you off solely on the grounds that you are insolvent or that you have filed a consumer proposal;
• To allow you to maintain possession of your assets.
  

AND AFTERWARDS …
Once accepted by the majority of the creditors (50% plus one, 1 $ = 1 vote), the proposal binds all of the ordinary creditors, even those who voted against the proposal.

All of the moneys deposited according to the terms of the proposal are paid to the trustee, who in turn will make the distributions to the creditors.
When the accepted proposal has been fully performed, the trustee will issue a document to that effect and you will be by law released from all of the debts and liabilities, except for those debts referred to in section 178 of the Act (hypertext)(ex. alimony, fraud, false pretence or fraudulent misrepresentation, student loans if less then 10 years, etc).

If the proposal is rejected by the creditors and if negotiations prove unfruitful, you are not automatically in bankruptcy; however, you are no longer protected by the Act against legal proceedings and/or seizures by your creditors.

In the event that you have accumulated the equivalent of three (3) months of late payments, your proposal will automatically be cancelled in accordance with the Act, producing the same results as if it would have been rejected.

Choosing this particular option will permit an individual with sufficient revenue to restructure his financial situation by acting in a responsible fashion. Your credit rating will be less affected, and your creditors will be more inclined to appreciate your efforts, you will be entitled to maintain possession of your assets, and during the proposal period, you will have developed excellent financial and budgetary practices.

When the Act was amended, the legislators wanted to allow more individuals to be released from financial debt problems without having to go bankrupt. The rise from 75 000 $ to 250 000 $ of the debt is a testimony to that.

Should the possibility of a consumer proposal exist, this option should always be considered as an alternative to bankruptcy.