Consumer proposals are a very popular, if not the most popular bankruptcy alternative in Calgary, Alberta. In fact, 15-20% of our cases are consumer proposals - a pretty high percentage considering that we at Bromwich & Smith Inc. focus predominantly on bankruptcies.
Ideal Candidates for Consumer Proposals
Ideal candidates for consumer proposals are those who have a stable income, and can afford to pay back their debts but need extra time to do so. Typically proposals work best for individuals with debts in excess of $10,000, to a maximum of $75,000.
Advantages of Filing a Consumer Proposal to Creditors
Advantages of consumer proposals include following:
- They can last to a maximum period of 5 years
- Negotiations can be made to pay back only a portion of the debt
- The proposal is usually accepted by creditors
- Interest is frozen from the date of filing
- Your creditors are "stayed" (cannot pursue legal action)
- Wage garnishments stop immediately
- Proposal helps you to avoid bankruptcy
Consumer Proposals - Process
Say you researched on both personal bankruptcy and available bankruptcy alternatives and decided that a consumer proposal is the right option for you. The following section explains what awaits you in the process of filing the proposal.
At the start of the process, our Calgary bankruptcy trustees will analyze your financial situation and calculate the amount you can afford to payback monthly. If both you and your creditors agree on the numbers, we will prepare the necessary documents and file the proposal. It is mandatory that you list all of your creditors in the proposal.
Once the proposal is filed, your creditors will have 45 days to vote for or against your proposal. The proposal is considered acceptable by all creditors if a majority votes in favour of it. Most of the time creditors will accept the proposal, as they would get even less back if you filed for bankruptcy. Once accepted, the proposal is approved by the courts, and you and your creditors are then bound into the terms of the proposal.
A meeting of creditors will be called if 25% or more of your creditors do not vote in favour of your proposal, and you must attend this meeting. We will help you and your creditors negotiate a plan that is acceptable for everyone.
You are allowed to miss up to two payments throughout the proposal period, and we will just add two payments onto the end. If you miss three or more, however, the consumer proposal will be annulled by the court, and your creditors can immediately apply to have your wages garnished. You will also have interest charges added to all of your debts dating back to when you filed.
Adjustments will be made to your credit rating to reflect your situation, and it will likely stay that way for the duration of the proposal. These comments will also be listed with the credit bureau for up to 3 years.
The cost to administer a proposal is based on a tariff set by the Bankruptcy and Insolvency Act, and is calculated out of the proceeds of your proposal.
If you are considering filing a consumer proposal, or would simply like to know and talk more about the available bankruptcy alternatives in general, please contact our bankruptcy trustees in Calgary today and arrange for an initial consultation free of charge. Our meeting rooms provide a comfortable environment where we can together review your options and find the best possible solution.
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