PERSONAL PROPOSAL PROCESSThere are two types of proposals sanctioned by the Bankruptcy and Insolvency Act the Consumer Proposal and the Division I Proposal.
The Consumer ProposalThis type of proposal is the most frequently used and is used for the less complicated situations. If your debts, excluding your mortgage(s) on your family home, are less than $250,000 you may consider a Consumer Proposal.
Generally consumer proposals are accepted in the 30 to 40 cents on the dollar range but the consumer proposal should give the creditors more than they would get in a bankruptcy. There are exceptions and our experienced counsellors at Glover-Drennan Inc. will advise you if they think that there may be another option for you. You may not lose your credit cards. That is a decision of the card issuer. Upon filing a Consumer Proposal, interest stops and all creditors must stop calling you. We provide the details of your proposal to your creditors and they vote whether to accept it or not. A Consumer Proposal is accepted when over 50% of the dollar value of your unsecured creditors vote in favour of your proposal. Once accepted, all your creditors are included, even if they don't want to be. When accepted, all you need to do then is make the payments you said you would make. Consumer Proposals are limited in length to a period of five years. Most consumer proposal can be paid off early without penalties or discounts if your financial circumstances change.
If you do not pay the Trustee according to the terms of your proposal, it is defaulted and will be annulled. If that happens, your creditors are free to re-commence their collections against you.
The Division I ProposalThe Division I Proposal is for the more complicated financial situations or where the unsecured debts exceed $250,000. This is a much more formal process and involves Court applications. To be approved, the unrelated unsecured creditors must vote in favour of the terms of the proposal by a majority in number of creditors and by 2/3 of the dollar value of the creditors that voted on the proposal.
Trustee fees are set in the terms of the Proposal. Our counsellors will be glad to review your affairs to determine if your circumstances show that a Division I proposal might be of benefit to you.