What is a Consumer Proposal?

A Consumer Proposal, unlike an informal debt settlement plan, is a formal, legally binding debt settlement agreement between you and your creditors, reducing the balance you owe, allowing you to eliminate your interest and reduce your monthly payments.


How Does a Consumer Proposal Work?

A Consumer Proposal administrator, such as Cameron-Okolita Inc., helps you prepare a written offer of settlement and prepares a summary of your financial affairs for review by your creditors.

Once prepared, the Consumer Proposal is filed with the Federal Government, Court protection is provided and a copy of the offer is provided to your creditors for review.

The creditors have forty-five (45) days to review and vote on your proposal.  Unlike an informal debt settlement plan, which requires 100% agreement by your creditors, a consumer proposal requires only 50% plus 1 of the participating creditors voting by dollars to vote in favour of your proposal.

If the majority of creditors who vote to accept your consumer proposal, it becomes legally binding on all of your creditors, even those who voted against it! This is a very significant advantage, when compared to an informal debt settlement plan, as all creditors are bound by the agreement, even if they voted NO.

If a creditor or group of creditors refrain from, or choose not to participate in the vote, then they are not counted in the vote percentage, and this makes it easier, because you only need 50% plus one per cent of the voting creditors to confirm acceptance.

In the event none of your creditors vote, and this does happen, your proposal is deemed accepted and, even though no one voted, all creditors are bound by it.


Who Can File a Consumer Proposal?

Any person who, not including their mortgage, owes $1,000.00, but not more than $250,000.00, and is considered insolvent. Being Insolvent means that you are not able to pay your debts as they become due, or the total value of your debts exceeds your assets.

Practically speaking, because of the costs of putting a consumer proposal together, consumer proposals make the most sense if a person’s total debt exceeds at least ten thousand dollars ($10,000.00).


Consumer Proposal Benefits / Advantages

A Consumer Proposal provides significant benefits as follows:

  • You can avoid bankruptcy
  • Collection calls and lawsuits are stopped
  • The Principal Balance of your Debt is reduced
  • Interest is frozen and No Interest is payable on your Debt
  • You make only one monthly payment
  • The length of time you have to make payments is significantly shorter than if you paid off your debts on your own
  • You get to keep most if not all of your assets*

(* Subject to a secured creditor’s right to repossess if you do not make your payments.)

More than 85% of the Consumer Proposals we send to Creditors are Accepted as Submitted.

Many peoples considering Bankruptcy are surprised to hear that a Consumer Proposal is an option available to them, and are surprised that creditors will consider reducing their debts.

Fundamentally, when creditors receive a Consumer Proposal from a Licensed Insolvency Trustee, they know it is serious, and that you are likely to go bankrupt if they don’t accept your proposal.

Creditors recognize that they are not going to get much in a bankruptcy, and the proposal will net them more. As long as a proposal is reasonable, we find that most creditors are willing to accept them, and more than 85% of the Proposals we submit to creditors are accepted as submitted.

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