CONSUMER PROPOSAL BASICS

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 Consumer Proposals

SUMMARY

A proposal is you making a deal with the creditors (it can be full or part payment). You make an offer and the creditors vote to decide if they will accept. You need a majority to vote in favour of your proposal and then the rest must accept the result even if they voted against your offer. Once accepted by the creditors and the court you have a deal.

The licensed insolvency trustee will use their years of experience to help you put together an offer that is fair and that the creditors are likely to accept.

CONSUMER PROPOSAL ADMINISTRATION

An offer is made to your creditors, usually in monthly payments based on what you can afford. The offer can be to pay the debts in full or a percentage of what is owed. The creditors vote on whether they will agree to your offer. Clearly, the closer you come to paying them if full, the more likely creditors will accept your offer. The proposal is made through a licensed insolvency trustee who prepares all the paperwork, notifies the creditors, and records the votes of your creditors.

CONSUMER PROPOSAL ADMINISTRATION

A simple proposal, is called a CONSUMER PROPOSAL, is available to those owing $250,000 or less excluding the mortgages on their principal residence. The unsecured creditors each get one vote for each dollar you owe them. When they vote, you need more than half of the votes received to be in favour of your offer for the consumer proposal to be accepted. If so, those unsecured creditors who vote against and those who didn’t vote are bound by the proposal. Only unsecured debts can be included in such a proposal, thus ongoing car loans, mortgages and other debts where the creditor has a lien on your goods are not addressed and would still have to be paid under the original arrangements.

Court approval is automatic for a consumer proposal unless someone complains to the courts. Such a complaint is extremely rare.

Once approved by the court and your creditors, payments are made to the trustee who divides the payments amongst your creditors. You also must attend 2 counselling sessions on money management to complete a consumer proposal.

It is important to set an amount that is fair to the creditors and that is affordable to you. If you fall behind 3 full payments in a consumer proposal it is deemed annulled, and you must deal with your creditors once again.

There is also a 2nd type of proposal for people who have debt over the consumer proposal limit or have a prior failed proposal: This is called an Ordinary Proposal, which can be made to all of your creditors, must be reviewed by the courts. If your creditors, or the court, do not accept your Ordinary proposal you would be deemed bankrupt. If the Ordinary proposal was accepted but you don’t make the required payments, you could also end up bankrupt.

Unlike a bankruptcy, all of your assets remain with you in a proposal.

When determining the amount to be paid into a proposal one can make the assumption it should pay the creditors more than they would expect to receive in a bankruptcy. Thus, the proposal amount should be greater than the amount of equity in your home, plus the value of other realizable assets and the expected amount of surplus income one would likely pay in a bankruptcy. The trustee will follow-up the values of the assets to ensure that the proposal is fair to the creditors.

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Extremely professional service by Mr. Thatcher and his team. Mr. Thatcher and his team were always available and quick to answer any questions concerning bankruptcy. I would highly recommend this company to anyone that would require his services!

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I have worked with Kevin and his office for many years and would recommend his services to anyone who is having financial difficulties. He is very professional and has spent many years helping people get out of tough debt situation.

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Sara C

The staff at Kevin Thatcher & Associates are incredibly understanding, non-judgmental people who honestly advised me of all my options before I chose to go bankrupt. I was surprised at how easily they broke down the process for me step-by-step so I was able to meet all the requirements.

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Alan S

I was in a real bind with a lot of debt from credit cards and payday loans but I met with Kevin and his staff were very understanding of my difficulties paying. I paid for 21 months under these federal income rules, but was way cheaper than if I did nothing.

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