September 5, 2017

A question I am frequently asked is: “what are the chances that my consumer proposal will be accepted by my creditors?”  The answer in a nutshell is “very good!”  The reason is that a basic premise underlying all consumer proposal filings is that they must provide the creditors with a better return than they would get from a bankruptcy filing.

So what is the magic number?  There isn’t one – there is no secret formula – some people think that it is a percentage of the value of the total debts owed – say 20-30% – but in my career I have seen creditors accept less than one cent on the dollar and I have seen them hold out for 100% plus 5% interest.  So how do we know what to offer them?

Your trustee will estimate what your liquid value is in a bankruptcy scenario and use that as the baseline threshold, along with his or her experience with your creditors, to determine what the consumer proposal payments should look like.  You can term out your payments under a consumer proposal for up to five years (60 months).

Overall more than 90% of consumer proposals filed are accepted by the creditors, either in their original form or as renegotiated.  Not all consumer proposals are successful, people’s lives change and sometimes they are unable to sustain the payments over the term.

Come in for a free consultation to find out if a consumer proposal is right for you.  And remember ONLY a licensed trustee in bankruptcy can file a consumer proposal – debt consultants can only help you with compiling the paperwork for the trustee in bankruptcy (the Officer of the Court).