How to File a Consumer Proposal
Determine if a consumer proposal is the option that best suits your needs., Meet with a licensed trustee to gather facts about your current financial situation., Prepare the proposal., Wait for creditors to accept your proposal., Fifteen days later...
Step-by-Step Guide
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Step 1: Determine if a consumer proposal is the option that best suits your needs.
Consumer proposals are good for people who don’t qualify for a bank loan, for those who don’t want to go bankrupt, and for those who are capable of making payments to creditors, but need a certain amount of time to do so.
They are also best suited for people with debts in excess of $5,000 to a max of $75,000. -
Step 2: Meet with a licensed trustee to gather facts about your current financial situation.
You need to determine how much you owe, and how much you can afford to re-pay each month.
The trustee will then compare that payment to the total amount of your unsecured debt (credit cards, lines of credit, personal loans, and income taxes), to determine how many months you will have to pay.
In most cases, secured creditors are excluded from your proposal (except if you owe a creditor more than the value of the item they hold security over). , Your bankruptcy trustee will prepare the consumer proposal for you, and send it to everyone you owe money to. , Most creditors will accept the proposal, because they’d rather get SOMETHING in a proposal, rather than nothing in a bankruptcy.
Under the Bankruptcy and Insolvency Act your creditors have 45 days to vote for or against the proposal.
If a majority of creditors vote FOR your proposal, then it is deemed to be acceptable by ALL creditors.
However, if 25% or more of your creditors vote AGAINST our proposal, your trustee will call a meeting of creditors.
At the meeting, the trustee will help both sides agree on an acceptable proposal.
You MUST attend this meeting. , From that day forward, both you and your creditors are locked into the terms of the proposal.
On the date you file, interest is frozen, wage garnishments (except support and alimony) are stopped, and your creditors are “stayed‿ and cannot take any legal action against you. , Throughout the duration of the proposal, you can miss up to 2 payments.
Those payments will simply be moved to the end of the proposal by your trustee.
However, if you miss 3 payments, the proposal collapses, and is annulled by the court.
If this occurs, your unsecured creditors may immediately apply to the court to garnish your wages.
Interest charges are applied to your debts back to the day that you filed your proposal. , Following the completion of your proposal, a note will appear on your credit record for up to 7 years from the date that you filed the proposal. -
Step 3: Prepare the proposal.
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Step 4: Wait for creditors to accept your proposal.
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Step 5: Fifteen days later
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Step 6: if there are no objections; your proposal will be approved by the court.
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Step 7: Start making payments.
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Step 8: Start rebuilding credit.
Detailed Guide
Consumer proposals are good for people who don’t qualify for a bank loan, for those who don’t want to go bankrupt, and for those who are capable of making payments to creditors, but need a certain amount of time to do so.
They are also best suited for people with debts in excess of $5,000 to a max of $75,000.
You need to determine how much you owe, and how much you can afford to re-pay each month.
The trustee will then compare that payment to the total amount of your unsecured debt (credit cards, lines of credit, personal loans, and income taxes), to determine how many months you will have to pay.
In most cases, secured creditors are excluded from your proposal (except if you owe a creditor more than the value of the item they hold security over). , Your bankruptcy trustee will prepare the consumer proposal for you, and send it to everyone you owe money to. , Most creditors will accept the proposal, because they’d rather get SOMETHING in a proposal, rather than nothing in a bankruptcy.
Under the Bankruptcy and Insolvency Act your creditors have 45 days to vote for or against the proposal.
If a majority of creditors vote FOR your proposal, then it is deemed to be acceptable by ALL creditors.
However, if 25% or more of your creditors vote AGAINST our proposal, your trustee will call a meeting of creditors.
At the meeting, the trustee will help both sides agree on an acceptable proposal.
You MUST attend this meeting. , From that day forward, both you and your creditors are locked into the terms of the proposal.
On the date you file, interest is frozen, wage garnishments (except support and alimony) are stopped, and your creditors are “stayed‿ and cannot take any legal action against you. , Throughout the duration of the proposal, you can miss up to 2 payments.
Those payments will simply be moved to the end of the proposal by your trustee.
However, if you miss 3 payments, the proposal collapses, and is annulled by the court.
If this occurs, your unsecured creditors may immediately apply to the court to garnish your wages.
Interest charges are applied to your debts back to the day that you filed your proposal. , Following the completion of your proposal, a note will appear on your credit record for up to 7 years from the date that you filed the proposal.
About the Author
Kathryn Ross
With a background in agriculture and gardening, Kathryn Ross brings 3 years of hands-on experience to every article. Kathryn believes in making complex topics accessible to everyone.
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