If you and your trustee have put together a reasonable consumer proposal, it’s likely your creditors will accept it. Why? Because proposals require that creditors be paid more through a consumer proposal than if you were to become bankrupt.
Sometimes, however, one or more of your creditors may disagree with the proposal terms or have questions for you and/or your trustee. In that case, a creditor can request a meeting if:
- The debt owed to that creditor, or other creditors, requesting a meeting is 25 percent or more of the total claims filed; and,
- The request is made within 45 days of the proposal’s filing date.
If a meeting of creditors is called, it will be held within 21 days of being called and your trustee will attend to chair the meeting. The trustee will assist in negotiations and discuss possible modifications to the proposal. Your creditors will then vote on the amended proposal. The vote is calculated according to dollar value: each dollar owed on a claim in the proposal is worth one vote. This means that a creditor owed $5,000 would have 5,000 votes, a creditor owed $75,000 would have 75,000 votes, and so on.
For your proposal to be accepted, there must be a total in favour of the consumer proposal of 50 percent plus one: for example, if creditors are owed $100,000 in proven claims, creditors representing $50,001 of those claims must vote in favour of the proposal. If enough creditors vote in favour, the proposal is deemed accepted and all other creditors — whether they voted against or not — are also legally bound by it.
Even if a creditor doesn’t actually attend the meeting, it may register its vote either at or prior to the meeting by way of a voting letter sent to them by the trustee.
Next week: a look at what your rights are during a proposal.
The Consumer Proposal Series
- What is a Consumer Proposal?
- Who can File a Consumer Proposal
- How to File a Consumer Proposal
- What Happens After You File a Consumer Proposal
- What Happens if Your Creditors Request a Meeting
- Your Rights During a Consumer Proposal
- Home Ownership During a Consumer Proposal
- My Creditors Refused My Consumer Proposal: Now What?
- What Happens If I Default on My Consumer Proposal
- What if you own your own business