Consumer proposals are legal applications done by a licensed insolvency trustees, where you make a proposal to the people you owe money to pay them a reduced amount over a five year period or less instead of filing for bankruptcy.
- what do you owe,
- who do you owe it to,
- about your family situation e.g. who is working,
- what is your household income, and
- what are your expenses.
From the information you provide, the proposal administrator completes an assessment and will give you options as to whether a consumer proposal is right for you. The administrator then contacts your creditors for you and explains your financial situation to them.
The administrator explains to the creditors that you cannot make the payments originally agreed to. The creditors are told and instead of going bankrupt where they would receive nothing, you are willing to make smaller reduced payments on what you owe.
The administrator then negotiates a monthly payment you can afford over a period up to five years getting you out of debt and avoiding bankruptcy.