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A consumer proposal is a popular bankruptcy alternative, and is best suited for people who are able to pay back their debts, but need a prolonged period of time to do so. To be considered a good candidate for a consumer proposal, you should have a stable career and income.
Consumer proposals are frequently compared to debt management plans. The main difference is that a consumer proposal is legally binding, and administered by the courts by a licensed bankruptcy trustee in Dartmouth.
Even though consumer proposals are offered to almost anyone, the best candidates are the people who are more than $5,000 in debt.
Advantages of filing a consumer proposal include:
- A maximum period of 5 years.
- They are generally accepted by creditors.
- Negotiations can be made to pay back only a portion of the debt.
- Interest is frozen at the date of filing.
- Wage garnishments end immediately.
- Your creditors cannot take any legal action against you.
Your personal bankruptcy trustee in Dartmouth will begin by reviewing your financial situation, and determining how much you can afford to pay each month. If the proposed numbers seem feasible to everyone involved, the trustee will file the proposal. All creditors must be included in the proposal.
Creditors are given 45 days to vote for or against your proposal. If 50% or more vote for the proposal, it is considered suitable by all creditors.
15 days later, if there are no objections; the proposal will be approved by the court. Both creditors and debtors are locked into the terms of the proposal from that date forward.
The bankruptcy trustee is permitted to call a meeting of creditors if 25% or more of your creditors do not vote in favor of your proposal. It is absolutely necessary for you to be in attendance. The trustee will act as a mediator and will help you and your creditors come to an agreement that is suitable for all parties.
Debtors are allowed to miss up to two payments during the course of the consumer proposal, and the trustee will simply add too payments onto the end. However, if you miss more than two, the consumer proposal will be annulled by the court. Creditors can apply to have your wages garnished right away. Interest charges are added to all debts dating back from the day you filed as well.
Directly after the proposal filing, your credit rating will be altered to reflect your current situation, and will probably stay that way until the proposal completion. A note will also remain on the credit report for up to seven years beginning from the proposal filing date.
Trustee fees are determined by the Superintendent of Bankruptcy, but generally the trustee will be paid from the proceeds of the proposal.
If you believe a consumer proposal is your best option, contact us immediately. Our licensed bankruptcy trustees in Dartmouth will offer you an initial consultations free of charge, and will examine your personal situation to determine the best option for you.
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