A consumer proposal process in Alberta is an alternative to bankruptcy that essentially allows you to consolidate your unsecured debts and pay them off in whole or in part in monthly installments and/or interest-free lump sums over a period of five years. A consumer proposal is a formal agreement that can only be facilitated by a licensed insolvency practitioner (LIT). Your trustee will work with you to suggest that your creditors change your payments or pay off only a percentage of your debt.

A consumer proposal lets you pay off 100% of your debt, but creditors usually accept a proposal that gives them a percentage of your debt because they get more back than they would in bankruptcy.

How do I file a consumer proposal? You cannot submit a consumer request yourself. You must apply to an LIT and can schedule a free, no-obligation consultation to determine if a consumer proposal is right for you.

Learn about the process of filing a consumer debt proposal in Alberta, from meeting with an LIT for the first time, to filing a claim with your creditors, to meeting the terms of your consumer claim and the rejection.

1. Your first step was to consult a licensed bankruptcy practitioner, a professional licensed by the Office of the Superintendent of Bankruptcy Canada. To their surprise, the trustee informed them that bankruptcy might not be necessary. The trustee says that Marie and Paul could prepare a so-called consumer proposal. This is an offer to creditors to repay a percentage of their debt over a period of up to five years. There are advantages to filing a consumer demand, says the trustee.

2. To start, the trustee explains that Mary and Paul must provide a complete list of their assets and debts. Using this information, the trustee creates a debt proposal in Alberta based on their ability to pay. The proposal is then submitted to the Office of the Superintendent of Bankruptcy Canada, the federal agency that regulates licensed bankruptcy practitioners. The trustee also says that if creditors garnish or sue their wages, those actions will also cease.

3. Once the proper documents have been filed with the Office of the Superintendent of Bankruptcy Canada, the trustee will present the proposal to the couple's creditors. Creditors then have 45 days to accept or reject the offer.

4. If the creditors seem unhappy with the proposal, the trustee can also negotiate changes such as higher payments to creditors, but if the proposal is rejected, Mary and Paul are told that they must look for other options to resolve their financial problems. According to our consumer proposal in Alberta experts, this may also include the opening of bankruptcy.

5. If the proposal is accepted, Mary and Paul are then responsible for making periodic payments to the trustee, who uses this money to pay creditors.

6. In addition, they must comply with all other conditions of the proposal. They are also required to attend two counseling sessions to help them get back on their feet financially.

7. If they meet the conditions, they will be legally discharged from the debt that was in the proposal. Mary asks about her credit score. Yes, she will be touched, she is told. But once the proposal conditions are met, they can begin to rebuild their credit rating and financial future.

Want to learn more about consumer proposal process in Alberta? Visit us at Consumer Proposal Alberta!