What is a ‘registered’ consumer proposal?


Maxine McCreadie

March 11, 2022 9:30 am GMT

While a consumer proposal is the most popular debt solution to deal with unsecured debts in Canada, the solution is often described in different ways. One of the terms that causes the most confusion is a ‘registered’ consumer proposal.

In this article, we’ll explore what a consumer proposal is, what it means for a consumer proposal to be ‘registered’, and who is legally able to offer consumer proposals in Canada.

What is a consumer proposal?

A consumer proposal is a formal, legally binding agreement between you and your unsecured creditors, which allows you to repay some of your unsecured debts through manageable monthly payments.

Working with a Licensed Insolvency Trustee (LIT), you will come up with a payment plan to repay a portion of what you owe and present it to your creditors. If they accept, you then make a monthly contribution to your debts, which will be shared fairly among your creditors. After your payment term, you will have no obligation to repay any remaining debts.

Consumer proposals are only suitable to help with unsecured debts; those that aren’t secured against an asset like your home. You will be expected to maintain payments towards your secured debts.

What does a ‘registered’ consumer proposal mean?

In practice, a ‘registered’ consumer proposal is no different to a consumer proposal. It’s a term that’s thrown around, usually by unlicensed debt consultants, in order to make their services sound more official.

The reality is that all consumer proposals in Canada are registered. When you file a consumer proposal and your creditors accept the terms, details of the arrangement will then be passed to the federal government, who keep official records of all formal insolvency procedures.

Can I file a consumer proposal myself?

No, you can’t. There are certain debt relief programs in Canada that an individual can handle by themselves – like a debt settlement, for example.

Programs like these are known as ‘informal’ debt solutions. They don’t need to be done via a licensed debt professional, and might allow you to deal with debts from both unsecured and secured creditors.

A consumer proposal is a ‘formal’ debt relief program, however. That means it’s a legally binding agreement that offers you legal protection from your creditors, and so the consumer proposal process has to be handled by a Licensed Insolvency Trustee.

What are the benefits of working with a Licensed Insolvency Trustee?

Licensed Insolvency Trustees are licensed debt professionals in Canada. If you’re interested in using a consumer proposal to take care of unaffordable debts, they will act as the administrator for your consumer proposal.

Your Licensed Insolvency Trustee will help you create a payment plan based on your affordability, propose that plan to your creditors, and distribute your consumer proposal payments amongst your creditors for the length of your payment term.

There are thousands of companies offering consumer proposal services in Canada, but not all of them are actually equipped to do the job. Make sure to do your research, and ensure the company you’re working with is a LIT firm that is licensed by the Canadian Government to file formal proposals to creditors through the Bankruptcy & Insolvency Act.

Does a consumer proposal affect your credit report?

Like most other debt relief options, a consumer proposal will be listed on your credit report, and it will have a negative impact on your credit rating, at least temporarily.

While having a consumer proposal listed on your credit report may concern some people, the benefits of a consumer proposal (which include legal protection from creditors, the ability to pay only a portion of your debt, and the fact that it is interest free) outweighs any negative
effects.  In addition, the LIT will provide you with the information and tools to rebuild your credit.

Where can I get more information on consumer proposals?

Living with debt can be extremely stressful, especially if creditors begin putting pressure on you to repay debts you can’t afford. That’s what we’re here to help with.

A. Fisher & Associates is a Licensed Insolvency Trustee that specializes in helping people in Ontario deal with their debt. We’re experts in consumer proposals, and can offer you guidance on other debt programs, from credit counselling to a debt consolidation loan.

If you’re living in Ontario and dreaming of being debt free, don’t hesitate. For a free consultation from a debt specialist, get in touch with us today.

Maxine McCreadie

Maxine is an accomplished financial writer, known for her expertise in the field of personal insolvency. Having worked in the international insolvency community for a number of years, she has gained a deep understanding of the intricacies of personal finance and the complexities of insolvency processes.

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