Steps in a Consumer Proposal
What are the Steps in a Consumer Proposal?
1. The first step in a consumer proposal is to contact a local trustee (known as a consumer proposal administrator) to schedule a Confidential and free initial consultation at the office of the trustee.
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You will have provided the trustee the filled out information form you received from him so that the trustee has all the necessary information to give you the best advise possible.
If you have the ability to present a proposal to the creditors you owe money, the trustee can explain the proposal rules to you and work with you to draft a consumer proposal that you can afford and that your creditors will accept.
Consumer Proposal Rules:
- Cannot owe more than $250,000, excluding house mortgage (if more than $250,000 is owed a Division I Proposal is available);
- Term cannot be for more that 5 years;
- Must be filed with a trustee in bankruptcy;
- Creditors must be better off than if you file for bankruptcy;
- “Better off” can mean:
Payments are made monthly over time;
- A third party such as a relative puts up a lump sum to be paid only if the creditors accept the proposal.
2. You will think over and digest the information received at the trustee’s office
If you decide to go ahead you will phone the trustee’s office and set up a time to go back to sign the documents.
This meeting will take about an hour.
3. The trustee sends the creditors a report on the financial affairs of the person.
Including the causes of financial difficulty; a copy of the proposal; a list of creditors and the trustee’s recommendation and reason why the creditors should accept the proposal.
If no objection to the proposal is received within 45 days of the filing of the proposal it is deemed to have been accepted by the creditors.
If no objection is received within 15 days after the deemed acceptance it is deemed to have been approved by the court.
When any creditor dissents a creditors’ meeting is required.
Creditors’ Meeting to Consider the Consumer Proposal.
- Consumer proposals are considered accepted if, within 45 days of the the filing, a creditor has not objected. If any creditor objects a creditors’ meeting is required;
- At this meeting the creditors will vote on the proposal, with the majority of dollars voting on the refusal or acceptance of the proposal deciding if the proposal will be accepted or not;
- All creditors, regardless of how they voted on accepting or rejecting the proposal must accept the terms of the proposal if it is accepted;
- If the creditors do not accept or the court does not approve the consumer proposal, the individual in debt will not be allowed to make a new proposal to the creditors;
- The person will not be considered bankrupt in the case of the consumer proposal not being accepted;
4. The vast majority of consumer proposals are accepted by the creditors because the creditors are better off financially than if the person goes bankrupt.
5. The Final Step of the Steps in a Consumer Proposal – The trustee will issue you a Certificate of Full Performance to certify that the proposal has been fully performed. All your eligible debts are now erased.
The credit bureau is notified of the full performance of the proposal and in 3 years the record of the proposal will be removed from your credit report.
The Certificate of Full Performance is an important document and should be kept in a safe place.