Understanding the Consumer Proposal Timeline
Are you overwhelmed by a mountain of debt? Considering a Consumer Proposal but unsure about the timeframe involved? In this article, we’ll map out the timeline for Consumer Proposals, providing you with a comprehensive understanding of this debt relief mechanism and its duration.
What Is A Consumer Proposal?
A Consumer Proposal is a formal, legally binding process that is administered by a Licensed Insolvency Trustee (LIT). In this process, the debtor makes an arrangement to pay back a portion of the debt to the creditors over a specific period of time. This process helps the debtor avoid personal bankruptcy while safeguarding their assets. The LIT files the proposal with the Office of the Superintendent of Bankruptcy (OSB) and presents it to the creditors for approval.
The Timeline for Consumer Proposals
The timeline for Consumer Proposals involves several key steps and can take several years to complete. Let’s delve into the details.
Step 1: Filing the Proposal
The first step involves finding a reputable LIT to act as an intermediary between you and your creditors. During an initial consultation, the LIT will delve into your financial situation, assessing your debts, monthly expenses, and income. With this information, the LIT will craft a proposal, which you’ll need to review and sign. The signed proposal is then submitted to the OSB and your creditors.
Step 2: Proposal Approval
Post filing, creditors have 45 days to request a meeting and vote on the proposal. If less than 25% (in terms of dollar value) of the creditors request a meeting within this period, the proposal is deemed accepted.
But if 25% or more of the creditors (again, in dollar value) request a meeting, the LIT will arrange a session for voting. A majority vote passes the proposal. If the proposal is rejected, the creditors can resume their pursuit for the full repayment. If approved, the LIT presents the proposal to a court within 15 days. If the court rejects the proposal, the creditors can continue their pursuit for the full repayment. However, if the court approves the proposal, all parties are legally bound by its terms. The debtor then has a maximum of six years to clear the debt.
Step 3: Making Payments and Credit Rating Impact
The approved payments will be made to the LIT. These payments are interest-free and their amount won’t increase. Once all payments are completed, a Certificate of Full Performance is issued. Three years after receiving this certificate, Equifax will remove the proposal from your credit history. TransUnion will do the same three years post completion of your payment or six years from the filing date.
In Conclusion
A Consumer Proposal is a viable debt management tool, but the process is time-consuming. It’s crucial to understand the timeline for Consumer Proposals to make an informed decision. If you’re considering filing a Consumer Proposal in Ottawa, reach out to Bankruptcy Canada. Our experienced LITs can guide you through the process. We also offer credit counselling services across Canada. Schedule a confidential consultation by contacting us today.
