Many people, at some point in their lives, will experience financial difficulties. Some of these difficulties are easily fixed while others may need professional assistance. By seeking professional assistance, you are taking the first step towards financial recovery. A licensed insolvency trustee is that professional.
A licensed insolvency trustee is licensed by the Federal Government and is the only person who can legally stop your creditors from the harassment of phone calls, law suits, garnishee on wages, etc. A licensed insolvency trustee can outline all your options and make recommendations that best suit your particular situation.
A Trustee not only assists individual debtors in making an Assignment in Bankruptcy, but can assist individuals in making a compromise settlement with your creditors to avoid bankruptcy. This option has become much more popular over the last few years – it is called a Consumer Proposal.
A Consumer Proposal is an offer, which is made by you to your creditors in order to modify the payments, or settle the debt owed to the creditors. A proposal may be a lump sum payment or based on a percentage of the total debt payable over a period not exceeding 5 years. The total amount owed is frozen on the date of filing the proposal, and no interest accumulates from that point forward.
In order to file a Consumer Proposal your debts must exceed your assets value. In other words, you must be insolvent. You must not be able to meet your debts as they generally become due. Your debts can’t exceed $250,000 in total for an individual Consumer Proposal or $500,000 for a joint proposal. These figures do not include your home mortgage amount.
The Trustee will help you prepare the proposal, prepare the required documents, and file the papers with the section of the government which handles insolvency proceedings, known as Industry Canada. Each creditor is sent notice of the proposal and will be asked to file a proof of claim with the Trustee and asked to accept or reject the proposal.
All creditors will have up to 45 days to consider whether to accept or reject your proposal. A creditor may vote by letter, either accepting or rejecting the proposal. If a sufficient number of creditors accept the proposal, then it will become binding on you and all of your creditors, whether or not they voted in favor of the proposal. The required number of votes is 50% + 1 vote in dollar value of claims filed to have the proposal accepted.
If the proposal is rejected, you will no longer be protected by the stay of proceedings. The Trustee will notify you, all your creditors and Industry Canada of this fact. Your creditors will now be able to take legal steps to recover their debts from you.
If and when the proposal is fully preformed, the Trustee must issue a certificate of full performance to you and Industry Canada and you will be relieved of all debts that were in the proposal.
If you fail to keep the terms of your proposal (i.e. get behind 3 payments in your proposal) then the proposal will be annulled, and your creditors will have the right to seek the recovery of the full amount of the debt minus any dividend payments received by the proposal.
A consumer proposal is intended to assist the consumer debtor that has allowed his debts to become unmanageable, and to make a compromise to his creditors rather than make an assignment in bankruptcy.
If you are currently experiencing financial difficulties we urge you to speak with a licensed insolvency trustee.