What Is a Consumer Proposal?
A Consumer Proposal is an alternative to bankruptcy. These proposals are for residents of Canada only. The U.S. Version of a consumer proposal is a Chapter 13 Wage Earner Plan.
A Consumer Proposal is a deal that the debtor makes with their creditors. This is a legally binding agreement between the debtor and the creditor. This is a way to avoid going to court and avoiding your wages being garnisheed. These plans are normally set up on a three to five year repayment plan and in some cases the creditor will only make you pay what you owe (minus interest) or a portion of the amount owed. Under this type of agreement; you do not have to worry about the creditors changing their mind later on and demanding more money.
In order to be eligible to file one of these Proposals you must be in a financial state where you are able to pay at least a portion of your debts and the debts must be greater than what you own. A debtor's unsecured debt must not be more than $250,000.
The first step in filing one is to get help from a professional administrator that will help you determine how much you can afford to pay each month and determine how long you would have to make that payment in order to satisfy your debts. He or she will then file this proposal with your creditors. The creditors then have 45 days to vote on the proposal. If 51% of the creditors are willing to accept your offer, then all of the creditors will be bound by that agreement. Those who did not vote have 15 additional days to submit an objection. If there are no objections it is accepted by the court and considered binding from therein. If 25% or more of the creditors vote no, there will be a meeting between you, your trustee and your creditors to try to reach an acceptable agreement.
As soon as the Consumer Proposal is filed, interest on any debts are frozen, any wage garnishments that are already in place are stopped and the creditors can have no communications with you until an agreement is reached.
So, if you are a resident of Canada and you have the ability to pay your bills but you simply need more time and wish to have your monthly payments lowered but do not want to file bankruptcy, why not consider filing a Consumer Proposal?
Consumer Proposal Collingwood.
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