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Steps to a Consumer Proposal
As interest rates rise and household debt ratios increase, more people are looking for solutions to their debt problems. Consumer proposals (proposal) have become a popular option to reach that goal. Filing a proposal to break free from your debt is a great solution. A proposal allows you to protect your assets and make long-term affordable payments. Below is an outline of the steps to filing a consumer proposal.

Meet With a Licensed Insolvency Trustee or Qualified Staff Member
The first step in the process is to book an appointment at the office of a Licensed Insolvency Trustee. Our office offers free consultations and has very flexible hours. Third party agencies will charge you upfront fees to perform the same tasks that will completed during the free consultation.

The Licensed Insolvency Trustee or qualified staff member will review the pros and cons of all your possible solutions. If your best solution is filing a proposal, we will begin drafting  one that is both fair and reasonable. Once we have prepared your proposal, we will then meet with you to review its terms and sign.

After signing your proposal, we will file it with the government. In these proceedings we will be referred to as the Administrator of your consumer proposal. At this point in time, collection calls and garnishments (unless related to a family support order) are to stop. It is important to let us know if the calls continue.

If you continue to receive collection calls, you can file a complaint with the Ministry of Government and Consumer Affairs. https://www.ontario.ca/page/filing-consumer-complaint?_ga=2.230800796.201141545.1529356770-1441108950.1527518183

Consumer Proposal Waiting Period
Now that your proposal has been filed, creditors have 45 days to consider your proposal. Creditors can either vote in favour, vote against or not vote at all. If your creditors intend on voting against they will need to request that a creditor meeting be called.

After 45 days, if less than 25% of your creditors have requested a creditors meeting, your proposal is deemed accepted. A creditors meeting will be called if more than 25% of your creditors have requested one. The 25% is based on dollar amount of proven claims.

A creditors meeting can also be requested by the Office of the Superintendent of Bankruptcy.

Negotiating Your Consumer Proposal
If the majority of your creditors are voting against your proposal, we will contact you about possibly amending your proposal. Amendments to your proposal usually require you increase your overall payment. We will keep you in the loop as we handle the negotiation process for you.

Creditors Meeting
A creditors meeting, if required, will be scheduled within 21 days from the end of the 45 day waiting period.

Attendance: Institutional creditors (banks, credit card companies, etc) generally won’t attend the creditors meeting. The Canada Revenue Agency, in most cases, will attend the creditors meeting by phone. Other creditors may or may not attend the meeting. You will be required to attend the creditors meeting in most cases.

The purpose of the creditors meeting is to allow creditors to cast their vote on the proposal. Most votes will be lodged by paper, prior to the meeting. Your proposal (or amended proposal) will be accepted if the majority of your creditors vote in favour. If the majority of your creditors have voted against, you can offer to amend your proposal. If your proposal is ultimately rejected by your creditors, your proposal will be closed out. You will need to consider other solutions if this is the result.

Court Approval of Your Consumer Proposal
Once you have the support of the majority of your creditors, the next step is court approval. Court approval is only necessary where, within 15 days of creditor acceptance, any interested party so requests court approval. If no one requests court approval, your proposal will be deemed approved by the Court. If court approval is requested, your Administrator will arrange for a hearing. In most cases court approval is not requested.

Full Performance of Consumer Proposal
Now that your consumer proposal has been accepted by your creditors and approved by the court, what’s next? Simple, all you need to do is perform the terms of your consumer proposal. This includes attending two credit counselling sessions.

Credit
Once you have fully performed terms of your consumer proposal you will receive a Certificate of Full Performance. This certificate operates the same as a discharge from bankruptcy.

Consequently, your consumer proposal will negatively affect your credit rating. This impact will last three years from the full performance of your consumer proposal.

Contact Us
For more information, please feel free to contact us at 519.601.9793 or at jason@jcaal.ca. You can also check us out at our website https://www.jcampbellandassociates.ca and Facebook: https://www.facebook.com/breakfreefromdebtwecanhelp/

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