A consumer proposal is a method of getting out of large amounts of debt while avoiding personal bankruptcy and protecting your assets. However, the process takes time — often several years — before you can become debt-free. Here’s what to expect in the consumer proposal process.
WHAT’S A CONSUMER PROPOSAL?
A consumer proposal is a legally binding debt repayment agreement between you and your creditors whereby you pay what you can afford over a set term. A licensed insolvency trustee (LIT) files the proposal with the Office of the Superintendent of Bankruptcy (OSB) and presents it to your creditors for approval.
HOW LONG DOES A CONSUMER PROPOSAL TAKE?
If you’re considering filing a consumer proposal, you should know the steps and how long it takes to complete. Here’s a rundown.
Filing. The first thing to do is find a trusted LIT to act as a third party between you and your creditors. During an initial consultation, the LIT will ask you detailed questions about your financial affairs, including what you owe, your monthly bills and your income. The LIT will then prepare a proposal for you to sign and submit it to the OSB and your creditors.
Approval. After filing, each creditor has 45 days to request a meeting and vote on the deal. After 45 days, if less than 25 per cent in dollar value of the creditor claims requests a meeting, the proposal is considered accepted.
If 25 per cent or more in dollar value of the creditor claims request a meeting, the licensed insolvency trustee will schedule a session where creditors will vote on the proposal. A majority vote approves the deal. If rejected, the creditors can once again go after you for their money. If approved, the LIT will present the proposal to a court within 15 days. If the court rejects it, the creditors can continue to pursue the money owed to them. If the court approves the deal, all parties are bound by the terms. You have a maximum of six years to pay everything off.
Payments and your credit rating. Your payments go to your LIT — they’re interest-free and will never increase after approval. Once all your payments are complete, you’ll be issued a Certificate of Full Performance.
Three years after receiving your certificate, Equifax will erase your proposal from your credit history. TransUnion will delete your consumer proposal from your credit record after three years of completing your payment or six years from your filing date.
SPEAK WITH US ABOUT FILING A CONSUMER PROPOSAL IN OTTAWA
At D. & A. MacLeod Company Ltd., our experienced Licensed Insolvency Trustees can guide you through every step of your consumer proposal process. We also offer credit counselling services in Ottawa and at our six convenient locations in Eastern Ontario. Schedule a confidential consultation by contacting us today.