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why would creditors want a 36 month period for a proposal

Recently this site responded that most creditors would prefer a 36 month consumer proposal period rather than 1 year. In my situation, a 21 month 1st time bankrupt with surplus income, bankruptcy is still worth less than a proposal. Can you explain this please. For me, the earlier it ends would be great. Just to start life again. Thank you.

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One Response to “why would creditors want a 36 month period for a proposal”

A licensed trustee said...

Creditors want to receive more in a proposal than they would receive in a bankruptcy. If due to surplus income your bankruptcy would cost, say, $500 per month for 21 months, your creditors would probably prefer a proposal where they received $400 per month for 3 years. You pay less each month, so it’s more manageable for you, but overall the creditors receive more.

Remember, with a proposal, once accepted by the creditors, you can repay a proposal as fast as you want, so it may not necessarily last for the full term.

The point is that creditors do not want a proposal to last for any specified period of time; what they are most interested in is the total amount they receive.