No, you can’t. But let’s make sure we are both talking about the same thing.

If you ask a Licensed Insolvency Trustee (“LIT”) what a consumer proposal is, the LIT will tell you that it is a specific process according to the Bankruptcy and Insolvency Act (“BIA”) where an individual can offer a compromise to their debts to creditors. This typically means total payments less than the full amount owed to creditors. If the required majority of creditors voting on the proposal is attained, the proposal legally binds all unsecured creditors (with minor exceptions). Once the proposal payments are completed, the debtor has no further obligation to pay the remaining amounts owed to creditors and the debtor has a “fresh start”, free from unsecured debt. Since this type of proposal is regulated by federal law, it has the authority of law to bind all unsecured creditors if a majority in debt value, (not necessarily all) creditors vote in favour of the proposal.

All of the processes described in the BIA to assist individuals or corporations can only be administered by an LIT who is licensed by a department of the federal government. This ensures that only impartial, qualified parties administrate the BIA to ensure fairness for both debtors and creditors.

Therefore, you cannot make a (BIA) consumer proposal by yourself.

However, you can make an informal or private offer to your creditors on your own. The problems you may encounter include;

  • all creditors will have to agree or you will have to pay the creditors that don’t agree in full, because if one doesn’t agree and starts seizing assets or garnisheeing sources of income your payment plan can fall apart
  • the more creditors you have the longer it may take to negotiate a deal with each creditor, and the more time it will take you to do so
  • the chance of every creditor agreeing decreases the more creditors you have
  • it can be difficult and time-consuming to find someone representing the creditor who has the authority to make a deal on behalf of the creditor.
  • each agreement with each creditor will need to be properly documented in order to ensure no further collection action by any creditor
  • CRA will not, by policy, settle a debt informally. If they settle with you everyone will want to negotiate their taxes.
  • most individuals do not have the experience or training to ensure that appropriate signed agreements are made to protect you in the future. Lawyers who are familiar with commercial law can prepare these agreements but their time can be expensive.

We have been asked in the past to negotiate informal proposals and the few we have attempted have run into many of the problems noted above. None were successfully negotiated. We do not attempt informal proposals anymore.

On the other hand, about 95%+ of the BIA consumer proposals we offer to creditors get enough votes to be accepted.

You can contact an LIT in your locality for more information about consumer proposals.