A consumer proposal is a legal process that allows individuals who are experiencing financial difficulties to reach an agreement with their creditors to pay off some or all of their debts. This option is available through the Bankruptcy and Insolvency Act in Canada, which provides protection from creditor harassment while allowing for the negotiation of a payment plan that is more manageable than the original debt amount.
During this process, an individual (also known as the "debtor") works with a licensed insolvency trustee to develop and submit a proposal outlining their financial situation, including income, expenses, and assets. The creditors then have the opportunity to review and vote on the proposal, either accepting it or rejecting it. If accepted by a majority of the creditors, the debtor is required to make regular payments over a specified period of time until the agreed-upon amount has been paid off in full.
A consumer proposal can be an effective way for individuals to resolve their debt issues without having to declare bankruptcy. It allows them to keep their assets and maintain a fresh financial start, as long as they are able to make the required payments on time.