Five things to know about a Licensed Insolvency Trustee’s role in a Consumer Proposal

If you’re struggling with unmanageable debt and worry you’ll never break the cycle of living from one bill to another, a Consumer Proposal may help you get the financial fresh start you deserve.

This is the fifth in a five-part blog series about what Consumer Proposals are, how the process works, and whether they might be the right solution for you to get permanent relief from your unsecured debt.

1. Only a Licensed Insolvency Trustee can administer a Consumer Proposal

A Licensed Insolvency Trustee is the only professional in Canada who is qualified to administer a Consumer Proposal. Due to the Trustee’s significant experience in the Consumer Proposal process, and to avoid receiving erroneous information, it is extremely important that you go directly to a Trustee for information about Consumer Proposals.

2. A Licensed Insolvency Trustee drafts and submits your Consumer Proposal to creditors

As an officer of the Insolvency system, a Licensed Insolvency Trustee always seeks a mutually beneficial debt resolution that satisfies your need for a financial fresh start and your creditors’ right to recover the money they’re owed.

There are several factors a Licensed Insolvency Trustee considers in developing a Consumer Proposal:

1. Is the amount affordable within your budget based on your current income and expenses?
2. Are creditors likely to accept the amount and terms of the Proposal?
3. Does the Proposal offer your unsecured creditors more than they would expect to receive if you filed a Bankruptcy?

3. A Licensed Insolvency Trustee manages all contact with your creditors

Once your Consumer Proposal is accepted, and while it remains in place, you will have no further contact with the unsecured creditors included in the process. You will make all payments to the Licensed Insolvency Trustee, who will then distribute the funds to your creditors. If a creditor involved in the Proposal reaches out to you for any reason, do not engage with them. Instead, contact the Licensed Insolvency Trustee immediately. 

4. A Licensed Insolvency Trustee often conducts your financial counseling session

All financial counseling sessions are conducted by either a Licensed Insolvency Trustee or registered, qualified insolvency counselor who is licensed to provide insolvency counselling on behalf of the Trustee. Many debtors prefer to attend these sessions with their Licensed Insolvency Trustee as there is considerable trust and rapport built up through the process. This often makes the learning process less intimidating.

5. A Licensed Insolvency Trustee issues your Certificate of Full Performance

Once the Licensed Insolvency Trustee is satisfied you have fulfilled all your responsibilities throughout the Consumer Proposal, they will report this with the Office of the Superintendent of Bankruptcy. They will then issue your Certificate of Full Performance which releases you from the debts you owed at the outset of the process and signals the beginning of your financial fresh start.