Questions about Consumer Proposals
Why is it called a “consumer proposal”?
The name “consumer proposal” accurately describes the process, because you are “proposing” a deal to your creditors. Your creditors have to agree to your proposal in order for it to work.
Consumer Proposals were created to allow individual consumers to negotiate repayment plans with their creditors in the same way that large businesses can (see Proposal to Creditors).
It’s a legal procedure, so there are specific rules that must be followed to ensure that both the person filing the consumer proposal and the person’s creditors are treated fairly.
What is a Proposal in Bankruptcy?
“Proposal in bankruptcy” is simply another term for a consumer proposal.
Can’t I just leave a creditor out of the consumer proposal?
This is a common question. The answer unfortunately is no. If you file a proposal to creditors, you are required to include all of your unsecured creditors. That goes for family and friends too. All of your unsecured creditors must be treated the same – it’s one of the basic conditions of filing a consumer proposal.
What if my creditors vote “no” to my consumer proposal?
If your creditors vote 25 % or more against accepting your proposal, the administrator will call a meeting of creditors. At that meeting (which you must attend) the trustee will help you negotiate with your creditors in an attempt to find an agreement that both you and the creditors find acceptable. If more than 50% of your creditors reject the consumer proposal, the consumer proposal cannot continue and you will need to find another alternative to deal with your debts.
Every consumer proposal is different, depending on your creditors, your individual case, and other factors. The administrator’s experience will be your best guarantee of a fair settlement.
What does a proposal to creditors cost?
The administrator’s fees are set by the Superintendent of Bankruptcy and are described in the Act.
In most cases, the administrator will be paid out of the proceeds of the proposal.
Using our earlier example, if you offered your creditors 36 payments of $350 to retire $25,000 worth of debt, your total payments would be $12,600.
The fees for the proposal would come out of that amount.
Would I qualify?
To learn more about the proposal process and how it would affect you, follow our step-by-step guide.
For a free consultation on whether a consumer proposal is right for you, contact a Licensed Insolvency Trustee near you.