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Filing a Consumer Proposal in Vancouver, British Columbia
If you are having financial issues and are unable to pay your debts as they become due, a consumer proposal may be an option for you. A consumer proposal is a situation where a person who is unable to meet his or her financial commitments makes an offer to his or her unsecured creditors to pay less than the total amount owing over a period of time. This lower amount depends on the individual’s unique situation and is based upon monthly income, family size, number of assets and an assessment of reasonable monthly living expenses. Once all agreed-upon payments are made, the outstanding debt is discharged.
If you feel as though a consumer proposal may be an option that you are interested in investigating further, you could benefit from speaking to a bankruptcy trustee in Vancouver. Despite the name, this financial professional does not just assist people in filing for bankruptcy. A trustee can also provide you with information on your financial options and help you file a consumer proposal in Vancouver.
The Consumer Proposal Process in Vancouver
The first step of the consumer proposal process is to sit down and speak with a trustee in bankruptcy. Only a trustee can legally file a consumer proposal. It cannot be done by a debt settlement company, credit counsellor or financial advisor. Most trustees offer a free consultation where they will review your financial situation and provide you with information on the debt relief options available to you.
If consumer proposal is an option and if you decide to proceed with a consumer proposal, the trustee will then determine what a fair offer to your unsecured creditors will be. Only unsecured debts can be included in a consumer proposal. Other debts such as mortgages and vehicle loans cannot be included. You will need to speak with these creditors directly if you are having difficulty paying down these debts.
The offer to your unsecured creditors will be based on your current debts and financial position. The proposal is then sent to your unsecured creditors who have 45 days to vote on whether or not to accept the offer. If your proposal is accepted by the majority of your creditors, then all are bound by its terms.
When you file a consumer proposal and it is accepted, you receive legal protection from your creditors. They are not able to contact you and collection agencies may not call. All communication with creditors will happen through your trustee. In addition, any legal action or wage garnishments that have started against you will be stopped.
After your proposal is accepted, you will need to ensure that you make your monthly payments as agreed. If you miss three monthly payments and do not make up these payments, your proposal will be annulled. In this situation, creditors will once again be able to contact you and take legal action to collect their money. For this reason, it is important that you make your payments each month.
As a part of the consumer proposal process, you will need to attend a two financial counselling sessions. In these sessions, you will learn about budgeting, money management and various financial skills that will help you avoid financial trouble in the future.
Once you have made all of your consumer proposal payments, you will receive a Certificate of Full Performance and the remaining outstanding debt will be discharged. You are then free to start rebuilding your financial life.
Why Would Creditors Accept a Consumer Proposal in Vancouver?
You may be wondering why your unsecured creditors would accept an offer for less than you actually owe them. The main reason is that creditors know that a person who is filing a consumer proposal is having difficulty paying their debts. Creditors would rather receive something than nothing. They know that, if they do not accept the proposal, you may have to file for bankruptcy. Depending on a person’s assets, creditors generally do not receive very much (if anything at all) in a bankruptcy situation.
Since a consumer proposal is prepared by a trustee in bankruptcy, creditors know that the trustee has reviewed the debtor’s financial situation and proposed a fair offer. In most cases, the offer is more than what creditors would receive in a bankruptcy. This increases the likelihood that the proposal will be accepted.