A Consumer Proposal, unlike an informal debt settlement plan, is a formal, legally binding debt settlement agreement between you and your creditors, which reduces the balance you owe, eliminates the interest on your debt, and reduces your monthly payments.
Do you want to:
A Consumer Proposal can help you achieve all of this and it is definitely an option everyone who is in financial difficulty should be made aware of and at least consider.
If you have a good job, with steady employment, and you can make some of, but just not all of your payments each month, or you are having to “rob Peter to pay Paul” on a regular basis to get your payments made, and are getting nowhere, a Consumer Proposal is probably a perfect solution for you.
A Consumer Proposal allows you to Keep your Assets and take Control of your Affairs!
In making a Consumer Proposal, the Trustee sits down with you, looks at what you make and reviews your expenses and financial commitments. The purpose of the first meeting is to see what payment you can afford to make and see if there is any room in your budget for expenditure reductions.
It is important that any payment commitment you make, when submitting a Proposal to your creditors, is achievable, and that we balance that against what a creditor might consider reasonable. Creditors respond negatively to client budgets that include significant expenditures for cigarettes, alcohol, entertainment, meals out, and discretionary recreation. That doesn’t mean, however, that all of these things must be eliminated. The key to acceptance by your creditors is everything in moderation.
If, for instance, you are sending your kid to hockey school, and that costs $4,000.00, it is very likely that a creditor will take exception to it.
Any person who, not including a mortgage on their residence, owes $1,000, but not more than $250,000, and is considered insolvent. Being Insolvent means that you are not able to pay your debts as they become due, or in the alternate, that the total value of your debts exceeds your assets.
Practically speaking, because of the costs of putting a consumer proposal together, consumer proposals make the most sense if a person’s total debt exceeds at least ten thousand dollars ($10,000.00).
A Consumer Proposal administrator, such as Cameron-Okolita Inc., helps you prepare a written offer of settlement and prepares a summary of your financial affairs for review by your creditors.
Once prepared, the Consumer Proposal is filed with the Federal Government, you receive Court protection and a copy of the debt settlement offer is provided to your creditors for review.
The creditors have forty-five (45) days to review and vote on your proposal. Unlike an informal debt settlement plan, which requires 100% agreement by your creditors, a consumer proposal requires only 50% plus 1 of the participating creditors voting by dollars to vote in favour of your proposal.
If the majority of creditors who vote, choose to accept your consumer proposal, it becomes legally binding on all of your creditors, even those who voted against it or didn’t vote! This is a very significant advantage, when compared to informal debt settlement plans, as all creditors are bound by the agreement, even if they voted NO.
If a creditor or group of creditors refrain from, or choose not to participate in the vote, then they are not counted in the vote percentage. This makes acceptance easier, because you only need 50% plus one per cent of the creditors who voted, to confirm acceptance.
In the event none of your creditors vote, and this does happen, your proposal is deemed accepted. Even though no one voted, all creditors are bound by it, and they can’t change their minds later.
The answer is simple and lies in whether or not a consumer proposal offers them a recovery which exceeds what would otherwise be available to them in a bankruptcy. Fundamentally, creditors are not going to let you term out your payments, keep your assets, write off a portion of those debts, and forgive their interest, if they are not going to get more than they would in a bankruptcy.
If they were to get less, they are more likely to say, “Forget it, have the guy go Bankrupt!” Similarly, if a proposal is too low and the creditors consider it too one-sided, they are also very likely to respond negatively.
More than 85% of the Consumer Proposals we send to Creditors are Accepted as Submitted.
Many peoples considering Bankruptcy are surprised to hear that a Consumer Proposal is an option available to them, and are surprised that creditors will consider reducing their debts.
At Cameron Okolita, we have years and years of experience dealing with creditors and have an understanding of what they will and will not accept. Taken together, our proposal acceptance rate exceeds 85%, and almost all of those proposals are accepted without amendment or change.
We take pride in our acceptance rate, and we like what we do. Making a difference in people’s lives is important to us and accepted proposals make us happy too!
Consumer Proposals are Canada’s #1 Alternative to Bankruptcy! We encourage you to Call or Contact us Today to find out more or ask us any questions you may have.
