Repeat Consumer Debt Proposal Filings and The Implications
When dealing with substantial debt, many Canadians turn to a legal agreement known as a consumer proposal. It’s an excellent method for reducing your debt by up to 80%. This negotiation, facilitated by a Licensed Insolvency Trustee, can be a lifeline for many, but the question persists: How many times can you file a consumer proposal?
Let’s delve into the details of what a consumer proposal is, the conditions for filing multiple times, and the potential costs involved.
What Exactly is a Consumer Proposal?
A consumer proposal is a legal debt resolution method in Canada, supervised by a Licensed Insolvency Trustee as per the Bankruptcy and Insolvency Act. It’s a negotiation with creditors to reduce your debt while ensuring a manageable repayment plan.
Once you file a consumer proposal, a stay of proceedings comes into effect. This stay means creditors can no longer contact you, providing peace of mind and the opportunity to regain control of your financial situation.
The Role of a Licensed Insolvency Trustee
A Licensed Insolvency Trustee is the only professional legally authorized to oversee consumer proposals and bankruptcies, the most impactful forms of debt relief. They offer advice across all debt solutions, working with you to agree on a reasonable repayment amount each month. Once this is decided, your trustee approaches your creditors to negotiate the terms of your consumer proposal.
Repetitive Filing: Is It Allowed?
Despite the relief offered by a consumer proposal, some individuals might find themselves in debt yet again. A commonly asked question, therefore, is: How many times can you file a consumer proposal?
The answer is, there’s no legal limit to the number of times you can file a consumer proposal. Unlike bankruptcy, where subsequent filings lead to extended waiting periods and increased costs, multiple consumer proposals rely solely on your creditors’ willingness to accept your proposal.
Filing a Second Proposal: What Happens if the First One was Annulled?
In some situations, your initial consumer proposal may have been annulled due to missed payments. If this is the case, you cannot file a second consumer proposal before concluding the original one.
However, there’s a workaround. You can revive your annulled consumer proposal instead of filing for a new one. This revival should ideally occur within a month of its annulment. If it takes longer, you need court approval to either revive the original proposal or to file another one.
Costs of Subsequent Consumer Proposals
Having understood the answer to how many times can you file a consumer proposal?, let’s explore the cost implications. The good news is that there’s no additional fee or cost increase for any second or subsequent consumer proposal you file.
The cost of a consumer proposal is determined by your ability to pay, which leads to a manageable monthly payment plan for up to five years. Your Licensed Insolvency Trustee ensures you commit to a reasonable amount that aligns with your financial capacity.
How to File a Consumer Proposal?
If you’re eligible for a new consumer proposal, here are the steps to follow:
- Consult with a reputable Licensed Insolvency Trustee for advice and qualification for a consumer proposal application.
- Collaborate with your trustee to draft your proposal.
- Submit the proposal to your creditors.
- Upon acceptance, your trustee files the consumer proposal documents, and a stay of proceedings is generated.
The process is identical for a subsequent consumer proposal. However, additional support may be needed to prevent the need for multiple filings.
Conclusion
A consumer proposal can be a strategic choice for debt relief, and the flexibility to prepare an agreement for debt relief more than once provides an added layer of security. However, remember that the success of subsequent filings relies heavily on your creditors’ approval.
If you’re considering a consumer proposal or need to file another one, the best course of action is to seek advice from a Licensed Insolvency Trustee. They can guide you through the process and ensure you’re making the best possible decisions for your financial future. Remember, the sooner you act, the quicker you can get back on the path to a life free from the pressure of unmanageable debt.
