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Consumer Proposal “Un-Official Tests”

I have been reading your site and am curious if you would owe no surplus income in bankruptcy, only have a nominal expected tax return and recently returned to work and could afford to pay some money every month under a proposal. Would your creditors just be thankful for anything above what they would get in a bankruptcy or would they have set standards whereby if you don`t pay for at least 3 years or cover X% of the debt its rejected?

Posted from: Ontario

One Response to “Consumer Proposal “Un-Official Tests””

A licensed trustee said...

In Ontario the major commercial creditors (ie banks) have unofficially created two tests that people must pass in order for them to accept a consumer proposal. First, it must offer them a greater benefit than they would receive if the person filed for bankruptcy (this is the point you are making in your question). The second, they require a minimum rate a repayment in order to justify keeping the accunt active in their system. Currently the minimum the major creditors appear willing to accept in a consumer proposal is at least 30% of the debt.

You have to pass both tests or it is unlikley your proposal will be accepted.