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What is a Resonable Offer?

I understand that this question is very broad-based and that the actual answer would depend on specific circumstances and ultimately the position of each respective creditors – but this is the question……
What is considered a reasonable or standard range of settlement when making an offer to creditors in terms of percentage of debt and the time frame to pay out a successful consumer proposal?

Would it be 10 cents on the dollar, 20 cents, 50 cents? I`m just looking for a rule of thumb. And how long of an amortization period to pay out the agreed to amount? Should I expect 3 months, 1 year, 5 years – again just looking for a rule of thumb?
Presently, I owe approximately $70,000 in unsecured credit card and unsecured lines of credit. If I offered 25 cents on the dollar over 36 months – would that be reasonable or unreasonable?
I am self employed with a very irregular income but my wife has a stable job and nets roughly $2800.00/month. I am confident that my self employment income is going to become much more stable but I cannot validate that view at the moment.

Posted from: Ontario

One Response to “What is a Resonable Offer?”

Barton Goth – Goth & Company Inc. -Trustee in Bankruptcy said...

You are correct that this is a difficult thing to answer without looking more specifically at your situation. I have seen everything from consumer proposals that pay a 6% recovery to paying all the debts in full. So the range is very broad and is largely based on your ability to pay, how much you are worth in bankruptcy and what the composition of your creditors is. If I were to pick an average number I would say roughly 20 to 25 % more than you are worth to your creditors in a bankruptcy.

As for the typical duration, most of the proposals I do are 3 to 4 years in length. However, this is often dictated by who the creditors are. For example, if a high percentage of your debt is with Royal Bank, then you are more likely to have a consumer proposal that is 60 months in length as this is what they require before they are willing to cooperate.