Surplus Income

July 20th, 2013 by Questions

I have read that you generally need to offer your creditors at least 1/3 of what you owe and more than they would receive in bankruptcy in order for a proposal to be accepted. I am wondering how much more that needs to be, if I was to go bankrupt I figure my payments and equity in my home would equal about 30% of my debt. Doing my budget I figure I can offer payments over 5 years that would equal about 55% of my debt. Is that 25% increase generally enough to give a chance of the proposal being accepted. Both of the figures don’t take into consideration trustee fees. Also wondering how CIBC is to deal with for consumer proposals.

Posted from: Nova Scotia


One Response to “Surplus Income”

, A licensed trustee said:

It sounds like you may have missed a basic point – your creditors expect you to offer them more than they would expect in a bankruptcy and/or about 1/3 of what you owe. If you have determined that a bankruptcy would generate about 1/3 of what you owe then that’s your starting point.

Of course your creditors would like to repay the debt in full, but you don’t need to offer to repay 55% unless you feel obliged to do so. Start at 1/3 and understand that your creditors have the right to accept, reject and/or counter your offer.

The CIBC is no more difficult to deal with than any other major bank. If the CIBC represents the majority of your debt and you’ve been dealing with them for years then you should expect that they may counter offer simply because they’ll know you can likely pay more.

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