Consumer Proposal Process
The consumer proposal process
The process for a consumer proposal in Ontario is as follows:
- The Licensed Insolvency Trustee files the proposal with the Office of the Superintendent of Bankruptcy (OSB).
- After the proposal is filed, you stop making payments to the creditors.
If your wages have been garnished or have lawsuits pending, these actions are suspended.
- The Licensed Insolvency Trustee submits the proposal to the creditors.
This report includes a report on your personal situation and the causes for the financial hardship.
- Creditors have up to 45 days to either accept or reject the proposal, or, if a meeting of creditors is held, prior to or during that meeting.
Meeting of Creditors
If one or more of the creditors (provided they are owed at least 25% of the total proven claims) request it, a meeting is scheduled. The OSB can also request the Licensed Insolvency Trustee to call a meeting any time within that 45 day period. The creditors’ meeting must be held within 21 days after being called.
At the meeting, the creditors vote to either accept or reject the proposal.
If no meeting is called, the proposal is automatically approved, regardless of any objections.
At the meeting there is a vote to accept or refuse the proposal. Here is how it works.
- A creditor’s acceptance or rejection counts as a vote.
- The number of votes must equal the total value of the proven claims. A simple majority (over 50%) decides. As an example, if the proven claims total $150,000 and the votes represent at least $75,001 of the claims, that is the simple majority that governs the decision. All other unsecured creditors must accept that vote.
- If there is no quorum of creditors present, the proposal is accepted.
If the proposal is accepted, any interested party has 15 days to ask the LIT for a review by the Court.
If there is no request, the proposal is approved by the court.
If the consumer proposal is accepted you:
- Are responsible for paying the LIT either a lump sum or periodic payments
- Will be required to conform to any other conditions in the proposal
- Retain all assets as long as you continue payments
- Must attend two financial accounting sessions
If the proposal is not accepted, you may:
- Make changes and resubmit during the creditor consideration period or at the creditor’s meeting
- Consider other options
- Declare bankruptcy
Meeting the Conditions
If you meet the conditions in full, you will be legally released from the debts listed in the proposal.
If you miss three payments, or if your payments are more than three months past due, the proposal is canceled and your creditors are free to take action to collect the money they are owed including accrued interest, unless the court ordered otherwise, or the proposal has been amended. If the proposal is canceled, it may be revived under certain circumstances.
As you can tell, this is somewhat complex. If you have questions or concerns, our staff is willing to help clarify as much as possible. We are here to help you make the best decision regarding your financial straits.
We are experienced and genuinely concerned about your future. Contact us today.
A Consumer Proposal is your Chance
for a Fresh Start.