Why Would A Consumer Proposal Be Rejected?

Understanding Consumer Proposal Rejections

“Why would a consumer proposal be rejected?” is a question that often arises when individuals are dealing with significant amounts of debt. The common answer is that your creditors want a higher return, and if you’re unable to meet their counteroffer, the proposal can be denied. However, there are several other reasons why a consumer proposal might be turned down by your creditors.

Factors Leading to Proposal Rejection

There are a variety of factors that could lead to the rejection of a consumer proposal. One of the primary reasons is related to the debtor’s conduct regarding their financial affairs. If creditors discover proof of dubious behavior, it could lead to the rejection of the proposal.

Here are some examples of such behavior:


  • Engaging in risky and reckless financial speculations, unjustified extravagance in lifestyle, gambling, or negligent handling of business affairs.
  • Causing unnecessary expenses to any of your creditors by mounting a frivolous or vexatious defense in any legal action rightfully brought against you.
  • Unnecessary expenditure by initiating a frivolous or vexatious legal action within the three months preceding the date of filing your consumer proposal.
  • Giving undue preference to any of your creditors when unable to pay debts as they became due, within the three months prior to filing your consumer proposal.
  • Being guilty of any fraudulent activities or breach of trust.
  • Committing any offense under the Bankruptcy and Insolvency Act or any other statute in connection with your property or your consumer proposal proceedings.


Choosing the Right Trustee

Choosing the right trustee to oversee your consumer proposal process is crucial. A professional trustee can give you the confidence and peace of mind you need to navigate this challenging time.

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