Debtors in Coquitlam, British Columbia who are looking for an alternative to bankruptcy, may want to consider filing a consumer proposal.
Consumer proposals allow people to pay back their debts over an extended period of time. They are ideal for those who have debts over $5,000, who have a stable income, and who are capable of paying at least a portion of their debt.
Unlike debt management plans, proposals are legally binding, and are administered by a licensed bankruptcy trustee.
The advantages of consumer proposals include:
* a maximum period of 5 years
* frozen interest from the date of filing
* it is typically accepted by creditors
* you can negotiate to only pay a portion back
* wage garnishments stop
* creditors are “stayed” from pursuing legal action
A trustee will begin by summarizing your financial situation to establish how much you can afford to pay your creditors each month.
Your creditors now will then have 45 days to vote for or against your proposal. If 50% or more agree that the proposal is adequate, it is deemed acceptable by all creditors. 15 days later, if none of your creditors have any objections, the court will file the proposal. From that point on, you and your creditors are tied to the terms of the proposal. The proposal must include all creditors.
However, if 25 percent or more of your creditors do not agree with your proposal, you and your creditors must return to the drawing board. Your trustee will call a meeting of creditors to help you and your creditors agree on an acceptable proposal.
Throughout the course of the proposal you are permitted to miss as many as two payments without being penalized. Your trustee will just add two payments onto the end of the proposal. However, if more than two payments are missed, your proposal will be annulled by the court, interest charges will be added to all debts dating back to the date you filed, and creditors can apply to have your wages garnished.
Your credit rating will be altered to reflect your financial situation during the proposal, and you will also have a note attached to your report for up to seven years.
Trustee fees are determined by the Superintendent of Bankruptcy but usually trustees will be paid from the proceeds of your proposal.