In Canada, you can only file a proposal through a Licensed Insolvency Trustee. There are many firms advertising that they can file a proposal for you. If you are unsure if they are licensed by the Office of the Superintendent of Bankruptcy (the “OSB”), there is a link at the bottom of the page that will provide you with the opportunity to search the Trustee directory that is managed by the “OSB”.
Proposals are formal arrangements governed by the Bankruptcy and Insolvency Act and are available to individuals or corporations. A consumer proposal is limited to those people owing less than $250,000.00 to their creditors, not including the mortgage on their home. If an individual’s debt exceeds that amount, they may still file a Division I proposal.
In both types of proposals, you work with the Licensed Insolvency Trustee to put together an offer to pay your creditors a portion of what you owe them over a set time frame. The proposal is filed with the Office of the Superintendent of Bankruptcy, and is sent to all of your creditors for their consideration. Once the required majority of your creditors accept the proposal, and in some instances the Court has approved the proposal, it is legally-binding on you as the proponent and your creditors.
There are time limits as to when creditors have the right to vote on the proposal.
Collection actions against you (garnishments of wages or bank accounts) by unsecured creditors will be stopped. Note that some Court Ordered payments (such as child support or spousal support) may be required to continue to be paid outside of the proposal.
The interest on the debt stops. (Student loans may be an exception)
You are making one proposal to all unsecured creditors.
When you file a bankruptcy, the creditors begin contacting the licensed insolvency trustee’s office, and you no longer have to deal with collection calls.