CP vs. Bankruptcy
February 7th, 2011 by Questions
Based on what I have seen on this site, a CP needs to be at least 1/3 of the debt.
If lets say I had total debt over 300K and a third of that would be 100K.
Now if my income level is only a bit above the threshold and based on my calculations, it looks like my creditors would get $200 + $500 = $700 for 21 months, that totals to about $14,700 in bankruptcy.
While in a CP, based on my income/expenses the most I could possibly offer is $1000 per month for 60 months, that would total to $60,000.
In a CP I would be offering more than 4 times what they would get back in a bankruptcy.
Would this have a chance of being accepted or would I still need to offer at least $100,000 (1/3 of debt) for them to even consider?
Posted from: Ontario
One Response to “CP vs. Bankruptcy”
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February 08, 2011 at 8:00 am, A licensed trustee said:
You’d think so wouldn’t you? In this particular case, the offer may be accepted because we are talking about some fairly large numbers. The caution is this – the major CDN banks have told the trustee community they are looking for 1/3 repayment – if you make an offer lower than that you have to accept the fact that it doesn’t meet the minimum criteria and therefore has a higher than average chance of being rejected.