Chantal Sylvestre Proposal FAQs

A consumer proposal is a formal offer to your creditors, made with the assistance of a Trustee in Bankruptcy, to settle your unsecured debts. The offer is usually in the form of monthly payments for a maximum term of 60 months. The payments are made to the trustee who distributes the funds to your creditors on your behalf. For a proposal to succeed, you need to have a regular source of income and have enough leftover after paying your expenses to make a reasonable offer to your creditors.

How can a consumer proposal help me?

A consumer proposal has a number of advantages.

	A proposal can reduce the total amount of money you owe to your unsecured creditors and give you extra time for payment. Once completed, you are released from the remaining balance of your debts.
	It requires only one affordable monthly payment, with no interest, based on your ability to pay.
	You get to keep your assets.
	Once accepted, it is binding on all of your unsecured creditors regardless of how they vote.
	A proposal immediately stops collection calls, wage garnishments and other debt collection proceedings.
	You avoid bankruptcy.
	Your credit rating is better than if you had filed for bankruptcy.

Can I make a consumer proposal?

If you are unable to pay your debts when they are due and owe less than $75,000, excluding your home mortgage, you can make a consumer proposal. If your debts exceed this level, you may be eligible to make a proposal under different provisions of the Bankruptcy and Insolvency Act. The trustee can provide you with more information regarding these provisions.

How do I determine how much to offer in the proposal?

After reviewing your financial situation and ensuring that a proposal is the right course of action, the trustee will prepare a budget to determine how much you can afford to offer in your proposal. The proposal must provide a better deal for your unsecured creditors than they would get if you go bankrupt, but it also must be reasonable for you.

How does a proposal get accepted?

Once you have agreed with the trustee on how much to offer, the trustee will prepare the proposal documents and notify each of your creditors. They will have 45 days to consider whether to accept or reject your proposal. If the majority of your creditors in dollar amount vote in favour, your proposal is accepted and is binding on all of your unsecured creditors. It is uncommon for a reasonable and viable proposal to be rejected.

What happens if the proposal is not accepted?

In the unlikely event that your proposal is not accepted, then your creditors can resume collection proceedings. You are not allowed to make another proposal and you may find that you have no other choice but to file for bankruptcy.

What happens if I have difficulty making the payments set out in the proposal?

Your proposal can be changed with the approval of your creditors. If, for example, your family income drops or you incur an unexpected expense, it may be possible to renegotiate the terms of your proposal with your creditors to lower the monthly payment in exchange for extending the payment period.

It is important that you continue making your monthly payments on time. If you stop making payments, your proposal will be annulled after three months of missed payments. In this case, you will lose the protection afforded by the proposal and your creditors can begin taking action against you to collect their debt.

What happens if my financial situation improves after the proposal is accepted?

If your situation improves, you have the option to pre-pay the balance of your remaining payments without interest or penalty.

What about my secured assets such as my house and car?

Secured creditors are generally not affected by a proposal. In most cases, you will continue to make your usual payments. However, you can choose to surrender a secured asset to your creditor and stop making the payments. If, for example, the value of your car is less than the remaining balance of the secured loan, you may be better off returning the car to your creditor. In this event, any shortfall that may arise from the sale of the car will be included as an unsecured debt in the proposal. You will not be liable for any further payments or penalties.

Are there any debts that are not released?

Certain debts are not released by making a proposal. These include:

	student loans, if less than 10 years from the end of your studies
	fines and penalties imposed by a court
	alimony and child support
	credit obtained under false representation

How will a proposal affect someone who co-signed or guaranteed one of my debts?

A consumer proposal only releases the person who made the proposal from their debts. A co-signer or guarantor is not released from the debt and will be required to repay it in full.

Is my spouse affected?

A consumer proposal will not affect your spouse, unless you have joint debts. If there are significant joint debts, you and your spouse can file a joint proposal.

How will my credit rating be affected?

Filing a consumer proposal will have a negative effect on your credit rating. However, your credit rating will be better than if you had filed for bankruptcy. The credit rating will be R9 (the lowest rating) for the period of the proposal and R7 for three years following the successful completion of the proposal. For more information on credit ratings, refer to www.equifax.ca or www.transunion.ca. Credit ratings are set and maintained by independent credit bureau organizations.