Will my Creditors Accept my Consumer Proposal?
If you have read any of the consumer proposal pages on this site, you will know that a consumer proposal is a popular bankruptcy alternative. It is also a “win-win” debt solution for the debtor and their creditors.
Making a proposal allows you to take advantage of the benefits of filing bankruptcy without the drawbacks and it also represents a better deal for your creditors.
In fact, one of the only rules for making a proposal is that your creditors must be “better off” than if the debtor was to go bankrupt. Your consumer proposal plan must offer your creditors more money than they would receive if you were to file bankruptcy.
Your creditors will have the right to vote on whether to accept your consumer proposal.
Therefore, your Trustee – acting as your proposal administrator – will help you draft an attractive proposal plan to your creditors.
Almost all proposals are accepted because it is a win-win solution and the creditors will end up better off by accepting your proposal.
Why do Creditors Agree to Accept a Consumer Proposal?
If you have already tried other debt relief solutions and are considering bankruptcy or a consumer proposal your creditors would prefer that you make a proposal.
Most creditors will prefer a consumer proposal to bankruptcy because they will receive more funds than in a personal bankruptcy.
As your creditors will receive less in a proposal than in a credit counselling plan or if you get a debt consolidation loan, your creditors are more likely to accept your proposal offer if you have tried these debt solutions.
How Much Do I Need to Offer my Creditors to Increase the Chances of my Proposal Being Accepted?
Your Licensed Insolvency Trustee will help you draft a proposal agreement.
Your Trustee will examine your finances, income and debt to determine what you can afford.
The Trustee will also determine what your creditors would receive if you went bankrupt. This will help them determine what a fair proposal offer would be.
Trustees have experience with structuring proposals that have the greatest chance of being accepted.
Generally, it is not surprising to see 99% of proposals being accepted.
Different creditors will require a different return on their claims in order to vote to accept a proposal. Your Trustee will have experience knowing what to offer to your creditors for them to accept.
In most consumer proposals, the debtor will repay approximately 30 to 40 cents on the dollar.