Negotiating A Consumer Proposal
For many people, a consumer proposal is a welcome relief from not only debt, but also eliminates the need to file bankruptcy. Once you've decided this is the best option for you, the next step is negotiating the consumer proposal.
It may sound overwhelming, but negotiating a consumer proposal is actually pretty straightforward. Here are a few things you can expect:
Your Bromwich & Smith Administrator will help.
From the very beginning, your Administrator will be there to guide and assist you. As a part of the process, you and your Administrator will complete forms that provide a clear and accurate
picture of exactly how much you owe and how much you can afford to pay back. For example, if you have $400 per month left after you pay all of your bills, your Administrator may advise you to set aside an additional $100 per month for unexpected expenses. The remaining $300 can then be used to pay on your proposal. Most consumer proposals offer a settlement to creditors for much less than what is owed, with interest no longer payable. Almost all are accepted at this reduced rate to what you owe.
The Administrator presents the proposal to your creditors.
If the thought of negotiating a consumer proposal directly with creditors is scary, don't worry, your Administrator handles that part. Once you determine what you can afford, the Administrator will take the proposal to your creditors for approval. Most consumer proposals offer to pay a percentage of the outstanding balance.
As an example, if you owe your creditors a total of, let us say, $18,000 and your proposal is to pay back $9,000, and it is accepted, you just reduced your debt by 50%. Now you only have to make a $300 monthly payment for 30 months, with no interest!
Your Administrator acts as the go-between.
You won't have to talk to your creditors; that’s what your Administrator does. They speak with your creditors so you don’t have to. Your creditors can’t talk with you, either. In fact, one of the advantages of a consumer proposal is that creditors and debt collectors are forbidden by law from contacting you once you begin the proposal process.
The proposal is accepted or rejected.
Once your proposal is presented to your unsecured creditors, they have the opportunity to review it. After the review they can provide documentation to prove that you owe them money and/or:
- Accept the Proposal as presented
- Reject the Proposal
- Request a meeting to discuss the terms of your Proposal
- Accept the Proposal with different terms
- Take no action
Your creditors have 45 days to decide on your proposal. Although there may be a bit of back and forth negotiating, most proposals are accepted. Creditors know they will receive more in payments if they opt for your proposal. They know that if you are forced to file bankruptcy they will lose more than they would receive through a consumer proposal.
A consumer proposal is one of several options that offer legal protection from creditors that is available to Albertans hoping to deal with unaffordable debt. With the assistance of Bromwich & Smith, negotiating a consumer proposal will provide you with a solution to your debt crisis and help you begin anew.