Filing a Consumer Proposal is a legal process for those in debt and who are so deep in debt that they don’t qualify for DMP (debt management program) or a debt consolidation loan. A Consumer Proposal can only be administered by a Bankruptcy Trustee.
When the Bankruptcy Trustee files a Consumer Proposal, he will be sending a “proposal” (hence the name) to your creditors, asking them that they accept less payment than what you owe them. For the Consumer Proposal to go through, creditors who hold at least half of the debt must agree to the proposal, otherwise, you would have to search for another debt settlement option, including filing for bankruptcy.
Filing a consumer proposal is often the last option before filing a bankruptcy. You should take the program seriously because:
If the majority of your creditors accept the proposal, then you will have 5 years within which to repay the agreed amount. If you are unable to consistently make monthly repayments on the program, the proposal collapses and you will not be able to file another one.
For Consumer Proposal, you do not pay any interest