If you find that you are experiencing financial difficulty and you are struggling to pay your debts in a reasonable period of time but can afford to pay a consumer proposal is an option. In a proposal you make an offer to repay a portion of your debts and your creditors vote to accept or reject that offer. First you will meet with a licensed insolvency trustee to sign your documents. The trustee will file your proposal with the Office of the Superintendent of Bankruptcy and submit it to your unsecured creditors for approval. This process is the voting period.
How the Voting Period Works
Your creditors are entitled to vote for or against the acceptance of your consumer proposal. The period allowed is 45 calendar days from the date when you signed and filed with the Ontario Superintendent of Bankruptcy. Every day is counted as a day, even holidays and statutory holidays. Each creditor gets one vote for every dollar of debt you owe them. In order for a vote to count in the total, a creditor must submit a valid Proof of Claim. In order for your proposal to be accepted, your trustee must not receive a majority of the votes cast against your offer.
If a creditor with 25% or more of the proven debts have voted against your proposal during the 45 day period, your trustee will be required to schedule a meeting of creditors. The meeting will be held within 21 days and all of your creditors now have until the meeting of creditors to vote. If your majority creditor votes no, they will usually make a counter offer.
However, if after 45 days, your majority creditor doesn’t vote against it or creditors have less than 25% of the proven debts requested for a meeting, your consumer proposal will be accepted. If a creditor votes after the 45 days, there vote will not count.
Am I protected from my creditors when I file a consumer proposal?
A consumer proposal is a procedure under the Bankruptcy & Insolvency Act ans as such it protects you from unsecured creditors. It will stop legal actions to continue, stop collection calls, wage garnishments and interest charged on your debt.
The protection period starts immediately upon filing of your proposal. That means that you are protected from creditor actions even during the 45 day voting period. If a meeting is required, creditor protection continues for up to the 21 days until a meeting must be held.