Consumer proposal….

October 10th, 2009 by Questions

I owe roughly $83,000 in unsecured debts, spread out as follows…… $23,000 mbna mc, $22,500 rbc visa, $16,500 amex, $16,200 cibc visa, $3,800 td visa & $750 telus cell phone.

My monthly income is well below the surplus level and I have no assets. I told my trustee I could afford about $100 a month, which is roughly 8% on the dollar owing. He suggested I not even bother with a consumer proposal because it`s unlikely it will be accepted, and he suggests I just declare bankruptcy. My question is, why wouldn`t the creditors accept an offer of $100 a month, when they will get nothing in a bankruptcy settlement? Or should I tell my trustee to try and offer a consumer proposal anyways? He said that RBC requires a 5 year offer always, where I wanted to offer a cash settlement (money coming from a relative). What is to stop me, though, from negotiating the 5 year settlement and then paying it out anyways? Why does RBC do this?

Posted from: British Columbia


One Response to “Consumer proposal….”

October 11, 2009 at 8:23 am, A licensed trustee said:

Your trustee is likely correct – an offer of $100 per month has very little chance of beign accepted. I’m sure if you offer to pay the $1500 preparation fee for filing the proposal up front then your trustee will allow you to try it, but in my opinion, you’d be throwing the $1500 away (but at least your trustee will be paid for their time).

There is a cost associated with the bank (or any other lender) to keep your file open and to process whatever payments they do receive on your debt. For whatever reason, most of the banks have decided they want to receive a minimum of 25% of the debt AFTER all expenses before they will agree to a proposal. In your case, that means you need to offer them somewhere around $28,000 in repayment in order to have a reasonable expecation that the banks will accept your offer. Based on that, you should be able to understand why $100 a month will be turned down.

The comment about RBC must be a regional thing – in my experience RBC is looking for a certain rate of return – they’d rather have it in 3 months than 60, but they’ll allow 60 if you need it to get to the dollars they require.

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