Consumer Proposals In London

What is a proposal? How does it work?  Is it better than bankruptcy?

What is a Consumer Proposal?
A proposal is a repayment plan in which you make a settlement with your creditors, usually for an amount less than the full amount you owe your creditors.  Some creditors will only accept proposals if the amount paid to them is greater than a certain percent of your total debt.  For example, one large Canadian bank usually only accepts proposals if their return will be 25% or higher.

The repayment can be done in monthly installments or as a lump sum.  Sometimes proposal will include clauses offering redemption of assets as well. The proposal should offer a greater amount than the creditors could expect to receive if you were filing an assignment into bankruptcy, otherwise there will be no incentive for the creditors to accept your repayment plan and they will reject the proposal.  If more than 50% of the creditors in dollar value and number reject the proposal, it will be defeated and you will be back where you started before filing the proposal.

It is important that you disclose all your debts and assets, so that we can assist you in preparing a proposal that will be acceptable to your creditors, but also one that you can fulfill the payment terms.

It sounds too easy – what am I required to do during the proposal?

Your major duties will include:

1. hand over all credit cards to the trustee whether or not they have outstanding balances
2. payment of the amount each month outlined in the proposal or any amendments that may happen.  If more than two (2) months of payments are missed, when the third month is missed your proposal will be annulled.
3. completion of two counseling sessions which will talk about money management, budgeting, credit repair and how to avoid future financial difficulties and other similar issues
4. attendance at any meetings of the creditors or other meetings that require your attendance
5. filing of tax returns each year the proposal is outstanding.

A consumer proposal makes sense if you can afford to make payments, but you cannot afford to repay your debts in full. To see if a consumer proposal is the right answer for you, call me for a free consultation at 310-PLAN, or E-mail me your questions.

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