In this video, Richard explains in simple language how consumer proposals in Toronto work as many people are not terribly familiar with them. First of all, a proposal is a proposal. There are two types, consumer proposals and regular proposals.

The regular one has been around since day one, I think, 1920 or so, however, it was designed mainly for corporate and commercial situations. Instead of the company folding, they made a proposal to their creditors, to stay alive, keep the jobs going, keep the business running. Maybe they turn a corner and eventually everybody is happy.

But, what about the ordinary person? Until 1992, there was no mechanism in place for a similar approach to the debt. So, in 1992, Parliament amended the Bankruptcy Act, as it was called then and introduced something called a Consumer Proposal.

The proposal was designed for an ordinary person, instead of going bankrupt, which is what they did in those days, they could say “no, I don’t want to go bankrupt, I think I will try to reach a deal with my unsecured creditors”.

And the process is simple, it is streamlined compared to the commercial proposal. And it is really designed to make it as easy as possible for a person to make that accommodation. It’s supposed to end up with a better result for everybody concerned. That is the whole idea what Parliament was trying to achieve.

Today consumer proposals in Toronto are more popular than personal bankruptcies.