Personal/Consumer Proposals

 
1. An individual whose total debts do not exceed $75,000, excluding mortgages on a principal residence, can make a consumer proposal to creditors. If the total debts exceed $75,000 OR if you want bankruptcy to be the consequence of the failure of a proposal, then a Division I proposal can be filed.

2. A proposal may provide for an extension of time for payment, reductions in interest rates, repayment of less than 100 cents on the dollar, etc. A proposal must be made to all creditors generally. It must (in the case of a consumer proposal) be completed within five years and it must provide that preferred creditors (e.g. rent arrears, Trustee's fees) are paid before other creditors.

3. An individual who wishes to make a statutory proposal must obtain the assistance of a Trustee. The Trustee will prepare and file the proposal. Once the proposal is filed, creditors cannot take action against you. However, secured creditors are not prevented from realizing on their security.

4. The Trustee will prepare a report on the debtor's financial affairs and send this report to all creditors so that they may assess the proposal. Unlike bankruptcy, you do not turn control of your assets over to the Trustee, unless this is provided for in the proposal.

5. In case of a consumer proposal, there will usually be no meeting of creditors to consider the proposal. If no meeting is held within 45 days from the filing of the consumer proposal it is deemed to be accepted by the creditors. The creditors, however, can request that a meeting of creditors be held to consider the proposal and you are required to be there.

6. If a proposal is accepted, it is binding on all unsecured creditors.

7. If a proposal is accepted by the creditors, all monies are paid to the Trustee who then makes distributions to creditors at regular intervals.

8. If a consumer proposal is not approved, the debtor is not automatically in bankruptcy. The debtor can make a revised consumer proposal if so desired. If a debtor is in default on the performance of the consumer proposal, the consumer proposal may be annulled and if it is, the debtor cannot make another consumer proposal.

9. A Division I proposal is similar to a consumer proposal but bankruptcy is usually the automatic consequence of its failure - either because the creditors refused the deal or because the debtor was unable to complete the terms of the proposal.

10. When a proposal is fully performed, the Trustee will issue a completion certificate to you.

11. Please note that any proposal will have a negative impact on your credit rating

12. Further details of the specific differences between the two types of proposals will be explained to you by the Trustee. Call us to find out more.

For further information or to get assistance contact us by phone at 403 266-6665, email or come in for a free consultation.