Druker & Associates

How do creditors agree?

Your proposal must offer your unsecured creditors more money than they would receive in a personal bankruptcy and they have to believe that you are capable of making the payments that you are proposing. Once creditors accept the proposal, the debtor makes the payments to the Proposal Administrator each month (or as otherwise stipulated in their proposal), and the creditors are prevented from taking any further legal or collection action. If the proposal is rejected, the debtor is returned to his prior insolvent state and may have no alternative but to declare personal bankruptcy.

Joint filing

The principal advantages of filing a joint consumer proposal are:

It increases the debt limit to $250,000 x the number of people involved.

It reduces the costs to administer the proposal, so that more of the money paid will go towards repaying the debt.

The disadvantage of filing a consumer proposal jointly is this: Each party is responsible for all of the payments. If two parties agree to split the payment and then one person stops paying, the other person must make up the difference or the proposal will eventually be annulled.

How does it affect my credit?

As soon as you file a proposal your credit rating will be revised to an R7 and it will probably remain at this rating until the proposal is completed. In addition, after you complete the proposal, a note will appear in your credit record for up to 3 years from the date that you completed your proposal.

Annulment of a consumer proposal

Annulment is a very serious matter, with these consequences:
All of your debts are re-instated, including any interest or penalties you could have been charged if you’d never filed the consumer proposal. You may not file another consumer proposal for the same debts without permission from the court. You have lost the payments you made. The money will be (or has already been) distributed to your creditors. It will not be returned to you. In most cases, when a consumer proposal is annulled, the individual(s) involved will file personal bankruptcy.

What should you do?
If you have already filed a consumer proposal and you find yourself missing payments, we strongly suggest you contact one of our trustees to discuss whether or not your proposal should be amended to avoid annulment.