Consumer proposals are rarely rejected, however, if your creditors do reject your consumer proposal, all hope is not lost.
When you file a consumer proposal, your creditors have 45 days to vote on whether they will accept the terms that you offered (this includes terms such as the payment amount and the length of the proposal) or reject those terms.
Consumer proposals are accepted or rejected based on votes by your creditors. The voting system operates under a majority rules process. This means that if the majority of your creditors accept your proposal, the creditor who voted “no” must participate in the consumer proposal.
If the majority votes “no”, this does not mean the end of the process.
In most cases, creditors will request a change to the original terms that you offered because they know that if you declare bankruptcy, they will most likely get less than you offered in the proposal. This could mean asking for a few more dollars per month or they may ask for a change regarding the length of your payment plan – keep in mind that 60 months (five years) is the maximum amount of time that a proposal can last.
If you agree to meet the creditor’s terms, your consumer proposal is deemed to be accepted and you would continue making your payments. However, if the terms are not acceptable to you, a counter offer can be made to your creditors.
When considering your consumer proposal, your creditors may do one of the following:
- Accept your terms as filed (vote yes);
- Reject your terms (vote no);
- Reject your terms and ask for a creditors meeting; or
- Do nothing.
If your creditors reject your proposal, you have options. You can:
- Renegotiate the terms of your proposal (i.e. amount or length);
- Withdraw your proposal and file for bankruptcy; or
- Withdraw your proposal and pursue a different debt relief option such as credit counselling, a debt management plan or work toward paying off your debt on your own.
If you’re considering debt relief options and worry that your consumer proposal will be rejected by your creditors, speak to a local consumer proposal administrator to discuss your situation and come up with an affordable proposal that will benefit both you and your creditors.