What is a Consumer Proposal

An insight into Consumer Proposals in Waterloo

 A consumer proposal is a legally binding agreement that alters your repayment terms. Moreover, it is a formal recommendation to your creditors to pay off the debt that results in extending the time for repayment, lessening the amount of the debt, or lowering interest payments. 

For security reasons and according to government regulations, Consumer Proposals can only be created by a Licensed Insolvency Trustee.

Consumer Proposal Process

Understanding the consumer proposal process in Waterloo 

The process for a consumer proposal in Waterloo and across Ontario involves the below steps:- 

• The Licensed Insolvency Trustee files the proposal with the Office of the Superintendent of Bankruptcy (OSB).
• After you file the proposal, you stop paying your creditors.

These actions get suspended if your wages have been garnished or you have pending lawsuits. The Licensed Insolvency Trustee submits the proposal to the creditors. This report contains your present situation and the reasons for the financial hardship. 

Meeting of Creditors

A meeting is immediately arranged without hesitation whenever one or more creditors are owed more than 25% of the total proven claims. Creditors have up to 45 days to either accept or reject the proposal or, if a conference of creditors is held, before or during the meeting. The Superintendent of Bankruptcy can also request the Licensed Insolvency Trustee to call a session within those 45 days. Upon being called, the creditors’ meeting must be held within 21 days. At the meeting, the creditors vote to accept or reject the proposal. Regardless of any objections, the proposal is automatically approved if no meeting is summoned.

Votes

At the meeting, there is a vote to accept or reject the consumer proposal. Here are the steps: –

• A creditor’s acceptance or rejection counts as a vote.
• A simple majority (over 50%) decides. The number of votes should be the same as the proven claims’ total value. For example, if the proven claims total $150,000 and the votes represent at least $75,001 of the shares, that is the simple majority that governs the ultimate decision. All other unsecured creditors must accept that vote.
• If there is no quorum of creditors present, the proposal is accepted automatically.

If the proposal is accepted, any interested party has 15 days to ask the Licensed Insolvency Trustee for a review by the court. The court approves the proposal if there is no request. 

Acceptance of a Consumer Proposal

If the consumer proposal is accepted in Waterloo, you:

• Are liable for paying the LIT either a lump sum or periodic payments. 
• Will be needed to conform to any other conditions in the proposal.
• Retain all properties and investments as long as you continue payments.
• Must attend two financial accounting sessions.

Rejection of a Consumer Proposal

If the consumer proposal is rejected in Waterloo, you:

• Make changes and resubmit during the creditor consideration period or at the creditor’s meeting
• Think about other alternate options
• Declare bankruptcy

Meeting the Conditions

You would be legally released from the debts listed upon meeting all conditions in the proposal.

There are circumstances in which you can revive a proposal if it is cancelled. If you miss three payments, or if your payments are above three months past due, the proposal gets withdrawn automatically. 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.

Do you feel this is a complex situation? If you have questions or concerns, our staff at Dana MacAre is willing to help clarify as much as possible. We help you make the best decision regarding your financial straits. We are experienced and genuinely concerned about your future. 

Contact us today without any hesitation at 1-800-665-9965.

Bankruptcy is not your only option

Bankruptcy is not the only solution when you are in financial difficulties. Canada offers a number of options; among them is the Consumer Proposal. However, that is not the only alternative.

In order to determine the best course of action, you should arrange an appointment with one of our accredited debt counsellors. You can handle this over the phone, video conference or in person.

It is free, and you are under no obligation to proceed. All of our meetings are completely confidential and we in no way judge your actions.