A consumer proposal is a great way for some people 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.
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 that knows what each of your creditors is likely to request, so that you can offer a viable proposal, so 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.
