It is important that you understand what a consumer proposal is at the outset as there is a lot of confusion around all the services being offered to consumers to solve their debt problems in Vancouver.You have heard and seen the advertisements on these other solutions on radio and television but these do not provide you with a balances view. A consumer proposal is a procedure, regulated by the Federal government, under which you make a formal offer to all of your creditors to pay them a portion of what you owe them, in full settlement of your debts. This payment is usually made over a period of time and the amount you offer to pay is based on your specific circumstances. If your creditors accept your offer then your debts are effectively reduced to the amount you have agreed to pay them.
What are the next steps filing a Consumer Proposal
If you decide that a Consumer Proposal in Vancouver is the right solution for you then you will need the services of a certified Proposal Administrator licensed by the government.
Administrators have significant experience in dealing with creditors on these issues and the success rate is very high assuming that your offer is reasonable. You will normally be entitled to a free consultation with the Administrator during which you will review your specific circumstances such as income, debts and dependents and work to determine the amount of a fair offer to all of your creditors.
On your behalf we would submit this offer to your creditors. They will have 45 days within which to accept or decline your offer. If your offer is fair based on your circumstances then it will generally be accepted by a majority and become binding on all. From that point onwards, all of the benefits described above come into effect upon signing. If they do not accept your offer, which is not common if it is fair, then you and your administrator can revise it and submit a new offer which would need to be higher but which must still be affordable within your monthly budget. During this negotiation stage, you are still protected from your creditors that is, they cannot take any steps against you to collect upon the debt.
The benefits of the protection and debt reduction outlined above, come with an obligation your behalf. Once the process in underway you must fulfill your obligations by continuing to make your monthly payments on time every month so that at the end of the period, usually 60 months, you can be given a Certificate of Full Performance. The legal effect of this is to eliminate the unpaid portion of your debts so you can start with a clean slate.
Why Would Your Creditors Accept Your Proposal
Before accepting your proposal your creditors will have to compare the amount you are offering to what they might get in all other forms of debt settlement. An important factor working in your favour is that creditors are used to working with Proposal Administrators and therefore, have confidence that the amount being offered is fair. The Administrator will look into the following items when helping you determine the amount payable under your proposal:
- the amount of your debts,
- your after tax income,
- the number of dependents,
- your monthly living expenses, and
- what your creditors could have received in a bankruptcy.
From this information it will be evident that your proposal is reasonable given your requirements for reasonable living expenses. They are also reasonable assured that they will receive this amount over the period of your proposal and that they do not have to invest any further time and cost in pursuing you legally.
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