What is a Proposal?
A Proposal is a legislated alternative to
Bankruptcy where a trustee helps you to negotiate a settlement
with your creditors. This settlement may include a reduction of
your debts, an extension of time for payment, or a combination
of these.
Can I file a Proposal?
As long as you owe more than $1000 and are not
able to pay your debts as they become due, you are eligible to
file a Proposal. There are 2 types of proposals available,
depending on your total debt load.
|
Consumer Proposal |
Is
available for those who owe less than $75,000 of debt
(excluding the mortgage on your home) |
|
Division I Proposal |
Is
available for those who owe greater than $75,000 of
non-mortgage debt |
What role do the Creditors play?
Creditor approval is required for a proposal
to be accepted. The level of support necessary for a proposal to
pass depends on the type of proposal offered. In many cases a
creditor meeting is necessary to discuss the terms and resolve
any potential concerns. If necessary, you will have the
opportunity to revise the proposal to make it more attractive to
the creditors.
|
Consumer Proposal |
The creditors have up to 45 days to
request a creditor meeting to vote on the Consumer
Proposal. If the meeting is held, a majority of the voting
creditors is required. If the proposal is rejected, you are
again fully responsible for your debts. At this point, many
debtors choose to file bankruptcy. |
|
Division I Proposal |
A
creditor meeting
is held 21 days after filing
the proposal. If the proposal is not accepted by two-thirds
of the creditors, the debtor is automatically
bankrupt.
|
How frequently is a proposal accepted?
Here
at Goth & Company, we have been able to maintain a 90%
acceptance rate of the proposals we submit. However, it is
important that the terms be carefully structured so that they
will be acceptable to the creditors.
Are all my debts released by a Proposal?
There are a few different types of debt that
cannot be considered in a Proposal. These include:
|
• |
Alimony /
Support payments |
|
• |
Debts due to
Fraud, Embezzlement or Misappropriation |
|
• |
Court fines &
Penalties (incl. restitution orders) |
| |
• |
Award of the
Court for intentional bodily harm, sexual assault or
wrongful death |
|
• |
Creditors not
disclosed to your Trustee |
|
• |
Student loans
(in certain circumstances) |
|
|
|
What am I responsible to do if I file a
Proposal?
Once you have filed a proposal, you are
responsible to do a few key things.
| |
• |
Disclose All of
your Debts |
| |
• |
Turn All Credit
Cards over to Trustee |
| |
• |
Attend 2
Counselling Sessions & any other meetings that may become
necessary |
| |
• |
Notify trustee
of any change in address, telephone, employment, family
circumstances or other conditions during the proposal |
| |
• |
File 9 Monthly
Income & Expense Statements with trustee |
| |
• |
Make necessary
payments to the Trustee according to the schedule set by the
proposal |
| |
|
|
What are the Benefits of filing a Proposal?
| |
|
|
| |
• |
Avoid a Bankruptcy |
| |
• |
Creditors stop
calling immediately. |
| |
• |
No more interest
being charged |
| |
• |
Financial Counselling
to help identify & address causes to prevent future
difficulties |
| |
• |
Most Garnishees
and Lawsuits
are stopped |
| |
• |
Assets are protected |
| |
• |
Provides
time to pay |
| |
• |
Reduces
the total amount to be paid |
| |
• |
Permits you a
Fresh Financial Start! |
| |
|
|
What is the Downside of filing a Proposal?
| |
|
|
| |
• |
Negative impact on
Credit Rating
(R7 listed with Credit Bureau for a maximum of 3 years after
completion of the terms of the proposal). |
| |
• |
Must
give up
credit cards |
| |
|
|
What must be done next to proceed with filing
a Proposal?
To begin the process you must first
contact a Trustee.
By focusing on the 4 functional areas of finance, your trustee
will help you to develop a reasonable plan that will allow you
to pay a portion of your debts, but still be able to support you
and your loved ones. Once the necessary documents are signed,
you need only keep up your duties under the proposal and the
Trustee will take care of the rest.
To discuss Proposals with us,
Call today!
| © 2004 Goth & Company Inc. All rights
reserved. |
|
