One option to consolidate your debts is to file a consumer proposal. Under the Bankruptcy and Insolvency Act, it’s a legal process and a matter of public record between you and your creditors to pay back part of what you owe. The amount you repay is largely based on your income and what you own. However, it can typically decrease how much debt you have to repay your creditors by significant amount.
A consumer proposal can only be put together and administered by a licensed bankruptcy trustee and costs around $1,500 to file. You’ll pay an initial setup fee, and if it’s accepted by your creditors and approved by the courts, you’ll have to pay the balance to move forward. In addition to this, the trustee will take 20% of your future payments as a fee for overseeing and managing your consumer proposal. To be legally binding, the creditors who own the majority of your debt must agree to the proposal. Once they do, you repay the agreed amount over a maximum term of 5 years, and a permanent public record is placed in a searchable, online database.