RBC as a Creditor in a Consumer Proposal
A consumer proposal is an offer to your creditors for how much debt you can afford to pay back.
If creditors agree, you can reduce your level of debt dramatically, although this will impact your credit rating.
However, since the proposal is an offer, creditors can either reject or accept it.
The Royal Bank of Canada is widely known as being a difficult creditor to deal with during a consumer proposal.
Why is this?
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During a consumer proposal, a large number of creditors will accept as little as 25 cents on the dollar for claims.
Indeed, it has been reported that they will charge 70 cents on the dollar.
Most people in debt will not be able to afford a proposal like this.
If RBC is one of your creditors, it is important to consider the variables that will determine whether they will accept your consumer proposal.
To understand this, you need to know how approval is granted.
The initial proposal will be sent to all your creditors with a voting letter.
This allows a creditor to mark their vote.
Creditors need to file with the trustee proof that they have completed the voting letter before they can be registered.
This process lasts 45 days and can lead to three different circumstances.
It’s possible that no voting letters are received and if this is the case then it is assumed that the creditors have accepted your proposal.
If the ‘no’ votes are less than 25% of the claims, the consumer proposal is also accepted.
As such, if the RBC votes ‘no’ and they make up less than 25% of the value of claims, the consumer proposal will be approved.
If the ‘no’ votes make up more than 25%, this will ultimately lead to a Meeting of Creditors by the trustee.
Here, each creditor will be asked to formalize their vote.
If you owe the RBC less than 49% of the debt, then the proposal will be approved, assuming that all other creditors then vote for it.
If this is not the case, you will need to accept the RBC’s terms for the proposal to be approved.
To know if your consumer proposal will be accepted, there are a few questions that the creditor will look at.
The first is what your net monthly income is.
Then, if you have a spouse or any dependents, this will be taken into account.
If you have any real estate, a vehicle, or other financial assets, these will also be looked at.
Finally, your household budget will also be taken into account.
Once these questions have been answered, it will be easier to get an idea of whether or not your proposal will be accepted.
To learn more about how to handle your debt, get in touch with us today.
You can contact us by phone, or fill in an evaluation form, and a member of our team will be happy to get back to you.
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