1) Meet with a Trustee for a free, no obligation assessment
The first step is to meet with a consumer proposal administrator (a trustee) who will help you summarize your financial situation.
Your trustee will ask you about your debts, assets, your family situation (eg your dependents) and your household income and expenses. They will help you look at all your debt relief options including a consumer proposal as well as budgeting, a debt consolidation loan, credit counselling and a debt management plan or if necessary filing for personal bankruptcy.
If a consumer proposal is the best option for you, your trustee will work with you to determine how much of a monthly payment you can afford to make. Then, they will compare that payment to the total amount of your unsecured debt to determine how many months you will be required to pay.
2) File with the Official Receiver at the Office of the Superintendent of Bankruptcy
If the numbers appear reasonable for both you and your creditors, the trustee will prepare the documents necessary to file a Consumer Proposal to creditors.
3) The Trustee Notifies Your Creditors
Upon filing the trustee will notify all of your creditors that you have filed a Consumer Proposal. The purpose of the Notice to Creditors is to make all of your creditors aware of your consumer proposal.
4) Your Creditors Vote
From the date when your proposal was filed with an Official Receiver, your creditors have 45 days to vote on your proposal. If 50% of your creditors, voting by dollar value, accept your proposal, your proposal will go through and all your other creditors must accept it as well. If less than 25% (based on the value of claims filed) of your creditors vote ‘no’ on your proposal, your propsoal is deemed accepted. If more than 25% (based on the value of claims filed) vote no, then your trustee will be required to call a creditors meeting. Usually creditors vote ‘no’ because they want more money. Your trustee will help you negotiate a deal acceptable to your creditors — in most cases a final agreement can be reached that will be acceptable to the majority (by dollar value) of your creditors.
5) During your Proposal
Upon filing of your consumer proposal your debts are frozen. You stop making payments to your creditors. Wage garnishments (except for family support) and lawsuits against you stop.
Once your proposal is accepted you make agreed upon payments to the trustee and you must attend two counseling sessions. You have less stress because you have solved your money problems without going bankrupt and have an end in sight.
6. Credit Repair After Your Proposal
Congratulations, after meeting the terms of your proposal, your Consumer Proposal is complete. Now you can begin the process of repairing your credit after bankruptcy.
Still have a question? Contact an expert for a free, no obligation evaluation.