A consumer proposal is like a consolidation loan, in that your payments are reduced to one monthly payment.  You make the payments to a trustee, who accumulates them and every six months pays the money out to your creditors.

The thing about a proposal is that it doesn’t necessarily involve paying pack 100 per cent of what is owed to the creditors. A proposal might just be a percentage. It’s basically making a new deal with creditors, so that they get paid to the best of your ability. The major difference between an informal arrangement with creditors and a proposal is that a proposal has the protections that are built into the law.

In an informal arrangement, if you have 10 creditors and nine agree to your arrangement and one doesn’t, that one can still sue you, still garnishee your pay and still seize things. Under a proposal, nobody can sue you.

You are protected by the law until it is determined that the creditors will or will not accept your proposal. They still have the option of turning you down, but while this is being considered everything is put on hold and nobody can pursue you legally.