There is much to learn about consumer proposals, bankruptcy, Licensed Insolvency Trustees (LITs) and much more. All of this relates to the exciting and compelling financial market in Canada, which is overseen by Federal and Provincial governments. In fact, LITs are certified directly through the Office of the Superintendent of Bankruptcy (OSB).

Still, when most people think about consumer proposals, they do not think about the exciting and compelling world of personal finance. Indeed, many people only find out about consumer proposals because they or a loved one has run into financial trouble that they cannot fix themselves. How do these disastrous debt situations occur?

Truly, there are too many reasons to count. Whether it is poor financial decisions, mismanaged credit or simply unfortunate financial circumstances, many people with otherwise spotless finances may find themselves struggling under a new debt load. As a result, it is important to provide relevant information and advice for these individuals in particular, but all Canadians can benefit from the knowledge in general.

All of this brings us to our topic of discussion for the day, which is “can I keep my car and house after a successful consumer proposal”. Understanding the answer to this question depends on understanding the process of consumer proposals and the role of Licensed Insolvency Trustees in particular.

Worried small business owner

The Process of Consumer Proposals

The first step in the process is for you to choose a Licensed Insolvency Trustee (LIT). These professionals adhere to a high standard of ethics and quality in their work and are overseen by the Federal government. Once you have chosen your LIT, the next step begins.

The next step is gathering information and drafting your consumer proposal. This will involve collecting statements from all your debtors, including credit card, loan and line of credit debt. Ensure you are honest about all your debt with your financial professional, as they can help you with most forms of debt, excluding leases.

After you have drafted your consumer proposal and sent it off to your creditors, several things will occur:

  1. Your creditors will have 45 days to accept or reject your proposal.
  2. They will have the opportunity to present counter-proposals as they see fit.
  3. Your LIT will begin handling all the correspondence between you and your creditors, meaning that you can expect collection calls, garnishments and interest accrual to stop immediately.

The final step in the process of consumer proposals is the acceptance of your proposal by your creditors. Here it is only necessary for half of your creditors to actually agree with and accept your proposal, as this makes the contract binding for all of them.


What You Can Keep & What You Can’t

You won’t lose everything after a consumer proposal, as payments for homes and vehicles will continue after the debt settlement services are concluded. So you will not lose your car or house in a consumer proposal.