Steps in a Consumer Proposal.
Step #1 of 5: Consultation with the Trustee
To begin making a consumer proposal the first thing to do is contact a local trustee to schedule a Confidential and free initial consultation at the office of the trustee. You will have provided the trustee the filled out information form you received from him so that the trustee has all the necessary information to give you the best advise possible. If you have the ability to present a proposal to the creditors you owe money, the trustee can explain the proposal rules to you and work with you to draft a consumer proposal that you can afford and that your creditors will accept.
Step #1 of 5: Consultation with the Trustee (Continued)
Cannot owe more than $250,000, excluding house mortgage (if more than $250,000 is owed a Division I Proposal is available);
Term cannot be for more than 5 years;
Must be filed with a trustee in bankruptcy;
Creditors must be better off than if you go bankrupt;
“Better off” can mean that payments are made monthly over time;
A third party such as a relative puts up a lump sum to be paid only if the creditors accept the proposal.
Step #2 of 5: Sign the Documents.
You will think over and digest the information received at the trustee’s office.
If you decide to go ahead you will phone the trustee’s office and set up a time to go back to sign the documents. This meeting will take about an hour.
Step #3 of 5: Creditors Consider the Consumer Proposal.
The trustee sends the creditors a report on the financial affairs of the person including the causes of financial difficulty; a copy of the proposal; a list of creditors and the trustee’s recommendation and reason why the creditors should accept the proposal. If no objection to the proposal is received within 45 days of the filing of the proposal it is deemed to have been accepted by the creditors. If no objection is received within 15 days after the deemed acceptance it is deemed to have been approved by the court. If any creditor dissents a creditors’ meeting is required.
Step #3 / 5: Creditors’ Meeting to Consider the Consumer Proposal.
• At this meeting the creditors will vote on the proposal, with the majority of dollars voting on the refusal or acceptance of the proposal deciding if the proposal will be accepted or not;
• All creditors, regardless of how they voted on accepting or rejecting the proposal must accept the terms of the proposal if it is accepted;
• If the creditors do not accept or the court does not approve the consumer proposal, the individual in debt will not be allowed to make a new proposal to the creditors;
• The person will not be considered bankrupt in the case of the consumer proposal not being accepted;
Step #4 of 5: Creditors Approve the Proposal.
The vast majority of consumer proposals are accepted by the creditors because the creditors are better off financially than if the person goes bankrupt.
The Fifth and Final Step: The Consumer Proposal is Completed.
The trustee will issue you a Certificate of Full Performance to certify that the proposal has been fully performed. All your eligible debts are now erased.
The credit bureau is notified of the full performance of the proposal and in 3 years the record of the proposal will be removed from your credit report.
The Certificate of Full Performance is an important document and should be kept in a safe place.