What Happens After You File a Consumer Proposal

You’ve made the decision to seek help with reducing your financial stress and you, with assistance from your licensed trustee, have decided that a consumer proposal is your best option, and your trustee has filed all the necessary paperwork. That’s it, right? You’re done!

Well…not quite.

In this, fourth in a ten-part series examining consumer proposals, we look at what takes place once the paperwork is filed.

In addition to submitting the information to the Office of the Superintendent of Bankruptcy (OSB), which oversees insolvency proceedings in Canada, your trustee will have sent copies of your proposal to all of the creditors involved. Those creditors will now have 45 days to consider your proposal and to either approve or reject it. At the end of the 45 day period, one of several things may happen:

  • Your creditors may simply accept the proposal. When more than half have done so, it is deemed to have been accepted by all of them.
  • Creditors may object to the proposal and may request a meeting of creditors, but only if the debts owed to them are 25 percent or more of the claims filed.
  • If no creditor meeting is called, then the proposal is deemed accepted — regardless of whether or not there may have been objections.

Assuming your proposal is accepted, you’ll then be responsible for fulfilling its conditions — i.e. making the monthly payments or the lump sum payment to which you’ve agreed. Once the proposal terms have been met in full, you will be legally released from any of the debts that were included in the proposal.

And if a creditor meeting is called? We’ll consider that possibility next week.

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