A Consumer Proposal is a legally binding process governed by the Bankruptcy and Insolvency Act that can only be administered by a Licensed Insolvency Trustee (“LIT”). It is available to individuals who have consumer debts of less than $250,000 (excluding mortgage secured by principal residence). In this process, you will work together with the Administrator under the supervision of the LIT to develop a proposal to your creditors. The proposal is very flexible and can be based around your financial situation. Typically, a proposal is a percentage of what is owed to the creditors, paid over an extended period of time. The maximum term cannot exceed five years. If you are looking for immediate protection from debt collectors, turn to Crowe Mackay & Company. We have a team of professional to help you. Dealing with debt is an overwhelming feeling, and we have Licensed Insolvency Trustees to assess your situation. We offer a wide range of options including ordinary proposal, corporate bankruptcy and receivership. Get in touch with us for more information.
Once a proposal has been formulated, it is forwarded to all of your creditors for their consideration as well as the Office of the Superintendent of Bankruptcy (“OSB”). A meeting of creditors in order to vote on the proposal may be required if creditors holding at least 25% in value of the total claims requests a meeting within 45-days of the date the proposal is filed. The OSB can also request a meeting. If no request is made, the proposal is deemed to have been accepted by your creditors and is now binding on all of your unsecured creditors regardless of any objections received. If a meeting is requested, the creditors will vote by simple majority in dollar value.
If your proposal has been accepted, you will be responsible for complying with the terms of the proposal and attend two counselling sessions. You get to keep your assets provided that you have continued to make payments to your secured creditors who hold a charge against same.
If your proposal is accepted by your creditors, the OSB or any interested party will have 15 days to ask the LIT to apply to Court to have the proposal reviewed. If no request is made, the proposal is deemed to have been approved by the Court.
Once the terms of your proposal have been fulfilled, you will be issued a Certificate of Full Performance and you will be legally released from the debts included in your proposal.
A consumer proposal is considered a better solution for both the debtor and the creditor compared to other debt-relief options. Filing a consumer proposal allows you to repay a portion of the debt you own without giving up any of your possessions.
Apart from allowing you to start anew, here are some of the reasons why you should choose consumer proposal:
One of the great benefits of a consumer proposal is that your assets are protected. You get to keep all your assets while eliminating your debts, including any equity in your home, investments, your car, and tax refunds.
Being a legal process under the Bankruptcy & Insolvency Act, a consumer proposal offers credit protection, preventing you from getting calls from collection agencies and wage garnishments. Once the majority of your creditors approve your proposal, it is binding on all of your creditors.
As part of the negotiation of a consumer proposal, you need to repay just a portion of your debt, often reducing the original debt amount. During a consumer proposal, you are not required to pay interest, leading to substantial savings over a debt consolidation loan or second mortgage.
Many people want to be relieved from debts, but don't want to file for bankruptcy. If you would like to repay what you can, you should discuss filing a consumer proposal with a Licensed Insolvency Trustee. Creditors are more likely to accept a consumer proposal if it offers more than what they expect to receive in a bankruptcy.
During the term of a consumer proposal, if you have enough to pay out the rest of the owed amount, you can do so without incurring any penalty or interest charges, allowing you to repair your credit faster.
To find out if Vancouver’s Consumer Proposal is the right choice for you, please contact one of the professionals at Crowe MacKay & Company. We will evaluate your financial situation and explain the pros and cons of the various options available that could help you solve your financial problems. We are here to help. You can also fill out the online form, or send us an email to schedule your appointment.