Consumer Proposals in Alberta: An Approachable Path to Debt Relief

Consumer Proposals

Consumer Proposals in Alberta offer a valuable solution to those facing overwhelming debt. In this article, we will go through the concept of a consumer proposal, how often it is used, particularly in Alberta, the benefits and deterrents, the entire process of starting a consumer proposal, and if it is the right choice for you, the readers.

What is a Consumer Proposal?

A consumer proposal is a formal debt management plan made for residents who are unable to repay their debts in full. It offers a managed way to settle existing debts and it is a legally sanctioned alternative to bankruptcy. Since it avoids harsh consequences that relate to bankruptcy for residents, Consumer Proposals are supported by the Canadian government.

Consumer Proposals in Alberta are tailored to individual situations, which makes them a suitable option for many. The consumer proposal increases the likelihood of acceptance, due to favorable terms for the creditors featured in them. There are even times when formal meetings with the creditors are not necessary anymore. If the consumer proposal is successful, it can guarantee a reduction in debt burden, potentially going as low as 20% to 25% of the original debt.

Are Consumer Proposals Common and Acceptable in Alberta?

To answer simply, yes. Consumer Proposals are both common and widely accepted in the province of Alberta, as they are across the country. Many residents in Alberta who are facing financial struggles and are having a hard time fully repaying their debts often end up exploring Consumer Proposals as an alternative to bankruptcy. The popularity of Consumer Proposal, especially in Alberta, could be attributed to the many benefits they provide, which include debt reduction and the opportunity to avoid more severe financial consequences.

The Consumer Proposal is a legally binding agreement and is structured to allow residents to regain control of their finances and work their way back towards the repayment of debts without the need to sell their assets, and possessions, or face the stigma that comes with bankruptcy. In addition, Consumer Proposals offer a win-win situation for both the debtors and creditors as they provide reasonable terms to creditors, which makes it attractive for all the involved parties. This combination of factors contributes to the acceptance and commonality of Consumer Proposals as a useful and viable debt relief solution for the residents of Alberta.


How are monthly payments determined for Consumer Proposals in Alberta?

The process of identifying the monthly payments for a consumer proposal includes a thorough and comprehensive evaluation and assessment of the debtor’s financial situation. It also includes negotiation with creditors and formulating a personalized repayment plan, which your Licensed Insolvency Trustee will complete. Once it is signed and accepted, the proposal gains legal tender, and compliance with the payment plan is important for successfully resolving and managing your debts.


Pros of Consumer Proposals

As mentioned, Consumer Proposals offer advantages that make it an appealing option for residents in Alberta:

  1. Lower Monthly Payments: Consumer Proposals make it easier to manage your financial obligations because they often lead to reduced monthly payments.
  2. Reduced Interest Rates: To provide relief from the burden of high-interest debts, it might result in lower interest rates.
  3. Legal Protection: So that the debtors will have peace of mind and enough breathing room, once the proposal is accepted, you are then legally shielded from creditor actions and collection efforts.

Cons of Consumer Proposals

Of course, with benefits come disadvantages as well. It is important to be aware of the limitations:

  1. Rigid Rules: Consumer proposals have strict rules that cannot be edited or altered once they are initiated.
  2. Secured Debts: Legal actions by creditors for secured debts, such as mortgages, continue, and interest accumulates during the proposal.
  3. Inclusive Nature: All eligible debts must be addressed in a consumer proposal and the debtor cannot selectively include or exclude specific creditors.
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How do you file a Consumer Proposal in Alberta?

Filing a Consumer Proposal can be a complex process, but we’ve distilled it into five straightforward steps to make it more manageable:

Step 1: Select a Licensed Insolvency Trustee (LIT)

Your first task is to choose a Licensed Insolvency Trustee (LIT) who will help you throughout the Consumer Proposal process. It is quite easy to locate LITs within your area using a government tool or a simple Google search. You may also want to visit our website and leave a message so we can reach out to you.

After identifying potential trustees, take some time to research their qualifications, and accreditation status, and read online reviews to ensure you are in capable hands.

Step 2: Review Your Finances

In collaboration with your LIT, you must undergo a comprehensive financial review which includes all your assets, liabilities, and monthly expenses. The evaluation will help you pinpoint where you are facing difficulties in repaying debts, which lays the foundation for a structured payment plan.

Step 3: Craft Your Proposal

Once you’ve partnered with your LIT and assessed your finances, it’s time to create a repayment plan that aligns with your situation. During this phase, you and your LIT will develop a budget that will be satisfactory with both your financial needs and creditors’ expectations. Your LIT will help you determine your repayment capacity, and payments will be structured at regular intervals. However, the schedule can be adjusted to accommodate your financial circumstances, with a maximum repayment duration of 60 months.

Step 4: Secure Creditor Approval

This is the most nerve-wracking part of the process. Creditors can either accept, reject, or request a meeting to discuss your proposal. The final decision on your proposal depends on a majority vote and if most of the creditors agree, it advances. The good thing to know as well is that even if some creditors disagree, they are legally bound by the decision of the majority.

Once the Consumer Proposal gets approved, it obtains legal protection from the government, shielding you from further legal actions and collection efforts.

Step 5: Adhere to the Payment Plan

Once your proposal is in effect, it’s crucial to diligently adhere to the agreed-upon repayment plan, much like staying on a clear path. If you encounter difficulties or uncertainties, don’t hesitate to reach out to your LIT for guidance. Additionally, you may be required to attend mandatory financial counseling sessions to enhance your financial skills for the future.


A consumer proposal, governed by Canadian law, offers several advantages for individuals seeking debt relief. It reduces debt substantially while consolidating all debts into a single manageable monthly payment. This option is renowned for its affordability, providing the lowest monthly payments tailored to your financial capacity. Additionally, it shields your assets, prevents the loss of tax refunds, and avoids the “surplus income” issues that can arise in bankruptcy. The proposal is removed from your credit report sooner than bankruptcy. It can be completed within five years, offers flexibility in lump-sum payments, and even allows for potential credit card acquisition during the process, serving as a viable alternative to bankruptcy for those seeking both financial relief and personal satisfaction.

Is a Consumer Proposal Right for Me?

Dealing with debt can be emotionally taxing, but it’s essential to explore your options thoroughly to make an informed decision tailored to your unique circumstances. Engaging with a non-profit credit counselor can provide valuable insights into your financial situation and guide you through available options. Remember that conquering debt requires patience, dedication, and a well-defined strategy.

Ultimately, knowledge is your most potent asset when considering Consumer Proposals. A comprehensive understanding of their pros and cons empowers you to choose a path that leads to a more secure financial future. Whether you are in Alberta or elsewhere in Canada, Consumer Proposals can be a viable means to regain control of your finances and work towards a debt-free future.

If you’re still unsure whether a consumer proposal is right for you, give us a call at 403-348-5815 and we’ll help you figure it out FOR FREE.