5. File a consumer proposal

A consumer proposal is a legal agreement between you and your creditors. Only a Licensed Insolvency Trustee can help you file a consumer proposal. A trustee can help you to set up new payment terms with your creditors. For example, your creditors could agree to:

• give you more time (up to 5 years) to pay back the debt
• reduce the amount of your payments
• accept a smaller amount than what you owe

For example, if you owe $1000, a creditor might agree to accept $500 instead. Many creditors will accept some money if they know you can't pay back the whole amount. If you file for bankruptcy, many creditors will not be paid at all.

A consumer proposal is different from a debt repayment plan because a consumer proposal is a formal legal process. If your plan is accepted by the majority of your creditors, both you and all of your unsecured creditors must follow that plan.

A consumer proposal is successful if the creditors that you owe more than half of your debts to must agree to the proposal. Your creditors can't sue you in court or send your file to a collection agency if they are included in a successful consumer proposal.

If you file a consumer proposal, you must follow certain rules. For example, you can't miss more than 3 payments during your consumer proposal. Your creditors will stop calling you to collect money as long as you follow the consumer proposal.

A consumer proposal usually includes only your unsecured creditors. An unsecured creditor is a creditor who does not have collateral. This means that the creditor does not have anything they can take from you if you don't pay your debt.

But if you are also having trouble paying your secured creditors, you can include them in your consumer proposal. A secured creditor is someone you owe money to that has collateral. For example, a car loan is a type of secured debt because your creditor can take your car if you don't pay.

Your consumer proposal will appear on your credit report for 3 years after you finish paying back the money. After 3 years, no one will be able to see that you had a consumer proposal unless they pay to search government records.