Consumer Proposal Frequently Asked Questions
What happens in a consumer proposal to creditors?
A bankruptcy trustee will assess your financial situation and determine what kind of monthly payment you can afford to make. They will then compare that amount to your total debt, and determine how many months you require to pay. If the numbers appear reasonable to both you and the trustee, the trustee will prepare the necessary documents to file a consumer proposal. It is essential that you include all of your unsecured creditors.
What happens if some creditors don’t like my consumer proposal?
According to the Bankruptcy and Insolvency Act (BIA), your creditors have 45 days to vote for or against your proposal. It is required to receive a majority (50% +1) to vote in favor of your consumer proposal. Usually, creditors will realize they’d get even less if you filed for personal bankruptcy, and would rather accept your proposal.
What happens after my proposal is approved?
After a further fifteen (15) days, if there are no objections; your proposal will be deemed approved by the court. From then on, you and your creditors are locked into the terms of the proposal.
What happens if I miss a payment?
You are allowed a maximum of three (3) payments throughout the duration of your consumer proposal to creditors. The consumer proposal collapses and annulled by the court. If you miss more than three (3) payments, the consumer proposal collapses and annulled by the court. Your creditors can immediately apply to the court to have your wages garnished and interest charges are applied to your debts all the way back from the day you filed.
What happens to credit my rating in a consumer proposal?
Your credit rating will be revised to reflect your current situation. It will likely remain the way it is until the end of the proposal period. A note indicating you filed a proposal will also remain on your credit report for three (3) years beginning from the date you completed your proposal.
What is credit counselling during bankruptcy?
Everyone who files for bankruptcy is legally obliged to attend a minimum of two credit counselling sessions within the 180 day period prior to filing for bankruptcy, in addition to a debtor education course.
The aim of credit counselling is to review your financial situation with a non-judgmental counsellor whose role is to help you explore all the available options and so that you can decide on the best solution for you out of your personal financial difficulties.
The principal idea behind counselling is to educate people who are struggling with debt so that they can avoid similar financial problems from occurring in the future.
During your credit counseling session your counselor will:
Discuss with you your debt, assets, income and expenses in order to have a clear overview of your financial position.
Help you decide if a filing for bankruptcy, enrolling in a debt management programme or other alternative is the best solution to your current situation.
Discuss with you ways to rebuild your future credit and manage your budget so that you do not have to face a similar debt crisis again.
With J. Bottom & Associates, all counselling sessions are organized individually and in complete confidence with experienced counsellors so that you can feel free to discuss in depth your personal situation.
Your first credit counselling session will be scheduled in the first 10-60 days and your second session must be completed within the 210 days following the bankruptcy. Once you have completed the two sessions you will be eligible for an automatic 9-month bankruptcy discharge.
With J. Bottom & Associates there are no additional charges for credit counselling – all costs are included in our Trustee Fee that we quote you upfront for handling your bankruptcy.
If you would like to find out more about credit counselling and how it can help to give you peace of mind and set you on the road towards rebuilding a stable financial future, please contact J Bottom & Associates today.
Our consultations are free of charge and without obligation and may help you to see how to put your debts behind you and get off to a new start.