The Bankruptcy & Insolvency Act provides two ways of dealing with your debt problems: The first of these is a consumer proposal. A Consumer proposal is a repayment plan that is formulated in accordance to the consumer's ability to pay. It may require paying back the full amounts owed, or only a portion of it. A consumer proposal may be in the form of a lump-sum payment and/or monthly payments over a maximum period of 60 months.

  Any Proposal will stop all interest charges going forward, as well as most legal proceedings and/or executions against your property or earnings. Proposals must be accepted by the prescribed majority of your creditors and must be approved by the court. The trustee or administrator may have to call a meeting of creditors (which the consumer must attend) in order to have creditors vote on the proposal. If the proposal is voted down it may be possible to amend the existing proposal in order to offer a better return to creditors. If a consumer proposal is not accepted, the consumer IS NOT automatically bankrupt; however there are usually few other alternatives then to proceed with an assignment in bankruptcy if the proposal is not accepted.

  A consumer proposal is reserved for consumers with total debt that is less than $250,000.00, excluding the mortgages on their primary residences. If the aggregate of a consumer's debt is more then $250,000.00, the alternative is a commercial proposal, the caveat being that if the commercial proposal is not accepted by the requisite majority of creditors, then the debtor is deemed (automatically) bankrupt.