Consumer Proposal: Can You File More Than Once in Quebec?

Filing a Second Consumer Proposal

At times we find ourselves in financial problems that require legal help including going for drastic measures like filing bankruptcy.  

But, the good news is that bankruptcy isn’t the only solution when you are facing dire debt problems in Quebec.

A trustee might assess your situation and advise that you file a consumer proposal instead.

If you don’t know the legal aspects pertaining to consumer proposal then read on.

We will answer some FAQs about a consumer proposal, including telling you what you need to know about filing a consumer proposal more than once in Quebec.

What’s a Consumer Proposal?

A consumer proposal is a legally binding negotiation between a debtor and a creditor detailing a debt repayment plan to suit both parties.

It is an approach provided by the federal government of Quebec as the last resort to bankruptcy.

Most people in huge debts tend to think that the only available option is to declare bankruptcy.

Through a consumer proposal, you can negotiate with your creditors and let them have a chance of recouping a good fraction of what you owe.

It allows you to pay off a fraction of your debts or in some cases, the repayment period is adjusted.

How to file a consumer proposal

Again, consumer proposals are government approved debt repayment plans. 

Thus, to file for a first or second consumer proposal you will need to contact a licensed insolvency trustee in Quebec to assess your finances first.

The trustee will determine how much debt you owe and how much you can raise to pay off.

The trustee files a proposal which he/she presents to your creditors who decide whether to reject, amend or approve your proposal.

If your proposal is accepted you start making monthly payments as stipulated in the agreement.

Some bankruptcy trustees will allow you to make bi-monthly payments if the option will ensure you don’t default.

However, if you fail to make the agreed payments your debt proposal will be nullified.

In Quebec, a debt proposal is annulled if you fail to make three payments.

A nullified proposal gives your creditors a go-ahead to take legal actions against you.

It would also mean that you will have to pay them the amount you owed them before the proposal plus it nullifies all payments you had made earlier.

Can I file a Consumer Proposal More Than Once in Quebec?

You have filed a consumer proposal once and you are probably wondering if you will be allowed to file for the second time.

The good bit is that the answer is yes!

You can file a second consumer proposal.

The law doesn’t have restrictions to the number of times one is allowed to file a consumer proposal.

In fact, you can file a proposal more than twice.

If for instance, ten years after your first debt proposal you find yourself in debts.

Then you are allowed to use a consumer proposal again.

Can my second proposal be rejected? 

A second consumer proposal is not different from the first.

Any proposal can be rejected whether it’s the first or the second. 

Sometimes creditors will reject a proposal depending on their company policy. 

When creditors reject your proposal, your appointed insolvency trustee contacts them to find other alternatives that would work for your creditors.

In most cases when the trustee argues out your financial situation well, the creditors would agree to take the settlement plan.

Such agreements will depend on how good a negotiator your trustee is.

Are there extra fees for second-time consumer proposals?

Most people get misinformed believing that they will be expected to pay higher fees for a second consumer proposal.

The truth is you will not incur additional or extra costs just because you are filing for the second time.

Any fees that you will pay is included in the monthly payments that you make to your insolvency trustee.

Discharge from second consumer proposal

Just like bankruptcy, consumer proposals have consequences or effects on your financial journey.

Most repayment plans for consumer proposals take between 3 – 5 years depending on your debt.

Once you have completed payments for your second consumer proposal you will receive a certificate of full performance to prove that you honored your consumer proposal and all balances have been discharged.

However, a second proposal stays on your credit report for a long period of time after you have been discharged.

You will need to work on your credit rating by saving and paying your bills on time before going for small loans.

Can I file a third consumer proposal before I am discharged from the second one?

Even though we noted that there are no restrictions for the number of times one can file for a consumer proposal, there are restrictions as to when one can file for a debt proposal. 

Some people incur debt while they are still trying to pay their current debt.

Unfortunately, it is not possible to file another one before you are discharged. 

It doesn’t matter whether you are almost done with payments for your second consumer proposal.

You won’t get a new repayment plan within an existing plan.

Talk to Trustee to Find Out About Filing a Consumer Proposal More Than Once

If you want help with your debts then a proposal might turn out to be the best solution.

A consumer proposal is seen as the last resort to bankruptcy.

With a proposal, you get to keep the things you value as you pay off your creditors.

You also stick with a credit note for three years after discharge, unlike seven to fourteen years for bankruptcies.

You can file a debt proposal more than once in Quebec but this doesn’t mean you should keep sinking into debts.

Speak to a licensed bankruptcy trustee for more information about avoiding recurring debts and filing a consumer proposal more than once in Quebec.

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