What is a Consumer Proposal? How do I file?
A Consumer Proposal is a formal legally binding debt settlement arrangement between a debtor and his unsecured creditors.
The Consumer Proposal
The Consumer Proposal arrangement is usually a monthly payment over time and based on amount the debtor can afford. It is administered in accordance with the provisions of the Bankruptcy and Insolvency Act and as such, only a Licensed Insolvency Trustee can file a Consumer Proposal on behalf of the debtor. They will act as the Administrator of the Proposal collecting your payment and disbursing distributions to your creditors.
Filing a Consumer Proposal
One of the biggest benefits to the filing of a Consumer Proposal is that only the majority of creditors by dollar value are required to accept the Consumer Proposal and the rest would be legally bound by it.
What is the difference between a Licensed Insolvency Trustee and Debt Management Firms that advertise debt settlements?
Companies that advertise as Debt Management Companies are not licensed to administer a Consumer Proposal. Generally, they advertise that they work for you and somehow can get you a better deal. This is simply not the case. The duties of a Licensed Insolvency Trustee under the Act are clear, the Licensed Insolvency Trustee must act honestly and impartial to all interested parties.
The Consumer Proposal is the debtor’s offering to the creditors. The Licensed Insolvency Trustee acting as Administrator of the Consumer Proposal, must report to the creditors as to the reasonableness and fairness of the Consumer Proposal to both the debtor and their creditors. Creditors vote on the acceptance and rejection of a Consumer Proposal depending on a number of internal factors, which can be different for each creditor. However, almost 100% of the time; there is a dollar value that the creditors will accept. If the amount offered by the debtor is insufficient, the creditor will respond with a monthly payment that would be acceptable to them. Again, please remember, the majority by dollar value that vote to accept the Consumer Proposal for all creditors would be legally bound by the Proposal regardless if they voted against it.
How do I file a Consumer Proposal?
The next step in the process is for a Licensed Insolvency Trustee to assess your financial situation. You can call D. Thode & Associates Inc., at 250-712-5353
D. Thode & Associates Inc. has offices in Kelowna, Kamloops or Penticton and would be meet with you to discuss your alternatives.