Understanding the Details of a Consumer Proposal in Vancouver

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 total 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 will be in the form of an offer to pay your creditors a percentage of what is owed to them, a request to extend the time you have to pay your debts, or both. The maximum term cannot exceed five years.

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.

To find out if a 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.

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