Why a Creditor Would Reject a Consumer Proposal, and What To Do

Consumer Proposal Canada – Topics & FAQ’s

A consumer proposal is a great debt solution for Canadians who want to deal with their debts.  The concept is simple: your consumer proposal administrator calculates what the creditors would receive if they were to reject your proposal and you were to go bankrupt, and you offer the creditors more.  For example, if the cost of bankruptcy in Canada based on your circumstances would be $2,000, offering the creditors $6,000 (perhaps $200 per month for 30 months) should be sufficient for them to agree to your proposal, since they are getting more money.

Key To A Successful Consumer Proposal

Unfortunately, here’s the hidden secret about why a creditor would say no to your consumer proposal: in addition to getting more money, they also want to get enough money to make the process worthwhile for them.  They incur costs to keep a proposal open, and to process their share of your $200 per month payment.  In some cases they decide that holding your file open for three to five years to get a few extra dollars simply isn’t worth it, so they reject your proposal.

The key to a successful proposal is to deal with a consumer proposal administrator who knows what each of your creditors is likely to request, so that you can offer a viable proposal.   Be sure to ask lots of questions; that’s the only way for you to decide whether or not your administrator has the experience to help you file a successful consumer proposal.

Consumer proposals are rarely rejected, however in the unusual event that your creditors indicate that they will reject your proposal offer, there is still something you can do.   It is possible to negotiate with your creditors during your meeting with those creditors in order to reach an acceptable agreement.  Again this is where the experience of your consumer proposal administrator will be invaluable.

If you are considering filing a consumer proposal or are looking for options in dealing with your debts we recommend that you talk to a professional who will look at your personal situation and help your choose the best option.  Contact a consumer proposal administrator to arrange a free initial, no obligation evaluation of your debts to see if a consumer proposal is the right option for you.

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