Consumer Proposal Payment Terms
So, you’ve reviewed your situation with a trustee and determined that you are eligible to file. That’s great, but how do you figure out what portion of your debt to offer your creditors in your consumer proposal?
First a couple of basic rules that MUST be followed:
- You must offer your creditors a greater benefit (more money) than they would receive if you were to file for bankruptcy, in order to get them to agree to your consumer proposal.This is pretty basic – if the deal you offer in your consumer proposal is for less money than your creditors will receive in a bankruptcy, why would any of your creditors agree to your consumer proposal?
- You must be able to make the payments that you are proposing.Again, this just makes sense. There is no point offering your creditors a payment plan that you know you can’t maintain. (Go and look at your budget again.) If your proposal calls for a payment of $500 a month and you can only afford to pay $400 your proposal is going to fail.
Good news / bad news
The good news is that the administrator will work with you to insure that these rules are kept – it’s part of the service they provide when you file a consumer proposal.
The bad news is that just because you’ve kept these rules, it doesn’t mean your creditors will accept your consumer proposal. Each creditor has their own set of criteria for accepting (or rejecting) a consumer proposal. Administrators that handle a large number of proposals will have a good idea of what those criteria are – the administrator should be able to warn you if any of your creditors require unusual terms or if the administrator thinks a particular creditor (or creditors) may ask you for more than you have offered.
The administrator will be helpful
At the end of the day, it is up to your creditors to accept your consumer proposal. That being said, the administrator will assist you to draft a consumer proposal that they believe is likely to be accepted. To do otherwise is a waste of everyone’s time.
Examples of consumer proposal payment terms
To see how your terms might look, see some examples of payment terms for consumer proposals that we have prepared for clients in the past.