Submitting a Consumer Proposal to Your Creditors
What Happens When I Submit a Consumer Proposal?
Submitting a consumer proposal to creditors can be a complex issue.
In this case study, you’ll find everything you need to know about this process.
Case Study: Lana & Jack
Lana was an ambitious graduate who earned a job as soon as she left college.
However, later on in life, her partner Jack was diagnosed with a long term illness that impacted his ability to care for himself.
Lana had to take time off work to care for her husband, drastically limiting their shared income.
Gradually, Lana accumulated significant levels of debt.
As their situation worsened, the couple believed that bankruptcy was their only option.
Their first step was visiting a Licensed Insolvency Trustee.
These professionals are licensed directly by the Office of the Superintendent in Canada.
The trustee quickly informed them that there was an alternative solution that could be more suitable: a consumer proposal.
They explained to the couple that a consumer proposal provided numerous benefits.
For instance, unlike in bankruptcy, there is no liquidation of assets and the proposal is binding.
Furthermore, there is also an automatic stay of proceedings.
This means that creditors can not continue to pursue legal action once the consumer proposal has been filed.
The trustee further explained that Lana and Jack will need to provide a complete list of everything they own and owe.
This information is then used to build a proposal based on how much they can afford to pay.
The couple was informed that the proposal would be filed with the Office of the Superintendent of Bankruptcy Canada.
This is the organization responsible for regulating licensed insolvency trustees.
Jack and Lana were informed that as soon as the filing is complete, they can stop making payments to unsecured creditors.
The creditors were then provided with 45 days to respond.
During this time, they were given the chance to either accept or reject the offer.
If the proposal was accepted the couple would be responsible for making the payments agreed to the trustee.
The trustee would then forward these payments to the right creditors.
They would also be held to any conditions connected to the proposal.
If all the conditions were met, the couple would be legally released from their debt.
This is exactly what happened for Lana and Jack.
Lana was concerned about how the proposal would impact her credit rating.
She was advised that her credit rating would be affected for as long as the proposal took to pay off as well as an additional three years.
However, during this time, they were told they can still rebuild their credit rating and improve their financial situation.
A consumer proposal is just one of the options available to you if you are facing a significant amount of debt.
It is important to note that there are other alternative possibilities.
If you are curious about other options or eager to get started with your consumer proposal, contact us today.
We will help you find the right path to debt relief.