Many people turn towards Consumer Proposals as an alternative to filing for bankruptcy.
A way of cutting down repayments so that they are mangeable, they can be a very powerful way of regaining hold of your finances and getting back on your feet.
However, when you file a Consumer Proposal, you could run the risk of your creditors not agreeing to it through a Consumer Proposal Voting process.
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But before we get into the potential outcomes of the voting process, let’s first discuss exactly what happens when you file your Consumer Proposal so that you’re prepared for what could happen.
With the help of a Licensed Insolvency Trustee (LIT) you can file a Consumer Proposal that dictates how you will repay any debts that you have.
The moment that this is filed by your LIT into the Office of the Superintendent of Bankruptcy, you’ll be put under a certain level of protection.
This protection prevents unsecured creditors from harassing you and demanding immediate payment while the voting process is taking place.
However, it does mean that once it’s filed, they can give a copy of the file to each of your unsecured creditors to consider.
What Happens During The Consumer Proposal Voting Process?
During the process, each of the creditors will have their say on whether they vote yes or no to what you’ve offered over 45 days.
A way of stopping collection activity and putting them all on a level playing field, it will take some of the stress off of you for a short time.
Throughout the process, your trustee will act as a communicator between you and the creditors.
A buffer, they are invaluable in the Consumer Proposal Voting process and could be the difference between it being rejected and accepted.
Typically, creditors will accept the proposal if what they would receive from it exceeds that of what they would get if you filed bankruptcy.
It’s important to keep in mind that the creditors can also abstain from voting.
The day after all of the votes have been collected, the trustee will then review them and determine whether your proposal has been accepted or rejected.
If a high percentage of the creditors have said yes (less than 25% have voted no) and there are no objections within another 15 days, then you’ll be able to go forward with your proposal.
What Happens if Your Creditors Vote No?
So what happens in the case that creditors vote against your proposal?
If more than 25% of the creditors reject your proposal, the trustee will see if there are any counter offers from them.
A typical occurrence, it signifies that your proposal still has the potential to go ahead.
Arranging a meeting to discuss the proposal, within this negotiation, your trustee will determine whether the amount you’re willing to repay could be increased, for example.
Alternatively, if you don’t want to compromise on your initial terms, you can allow your proposal to be rejected, you would then have to file for bankruptcy.
Contact Bankruptcy Canada Today
If you’re considering filing a Consumer Proposal or are looking for more information surrounding the voting process, don’t hesitate getting in contact with one of our local and licensed trustees today.
You can do this by either calling us on (877) 879-4770 or by dropping us an email through our online form.
Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
Consumer Proposal Eligibility
How to Amend a Consumer Proposal
