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Would I be considered in default if my Consumer Proposal gets rejected?

I have a couple of credit cards and a line of credit that currently have favorable interest rates. I only have one that is at 22% and the rest are 1.99%, 4%, 10-12%.

If my consumer proposal were to get rejected by my creditors, what happens to these interest rates? Will the creditors consider me as being in default?

I am still able to keep up with the minimum monthly payments but don’t know for how long. Or will it be as if nothing happened and I am still allowed to carry on with my monthly payments?

I know this isn’t the other type of Consumer Proposal (Type II I believe) where I will be forced into declaring bankruptcy.

There is also the risk of the creditors changing these interest rates on me which is why I think going the C/P route is best for my family’s interest.

Thank you.

Posted from: Ontario

One Response to “Would I be considered in default if my Consumer Proposal gets rejected?”

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

If you file a consumer proposal and it gets rejected then yes you would be considered in default. There is no way around this as the moment you file a consumer proposal the creditors legally cannot take any more payments from you, so it is not possible to continue to make the minimum payments. As a result it would be up to each individual creditor if they were willing to accept minimum payments again.

However, this is really all in theory as we find the majority of proposals are accepted. For example, I know that in my office we are at approximately 97% of proposals are accepted, although I am in Alberta. I would recommend you contact an Insolvency Trustee in Ontario.