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NB & PEI Personal Proposals - Consumer Proposals & Division I Proposals. Avoiding Bankruptcy.
This short presentation summarizes the steps involved in Consumer Proposals.
To get a consumer proposal started you meet with a Licensed Insolvency Trustee, who will use the information you provide to come up with a plan that will allow you to pay only a part of what you owe.
Consumer proposals have the following advantages:
- You can pay only a portion of your debts (say 30%);
- You can extend the time you have to pay off the debt; or provide some combination of both.
- Filing a consumer proposal means you are not bankrupt.
- You can keep assets that might be lost in a bankruptcy.
- You make only one payment a month, that you can afford.
To be acceptable, your creditors must receive a greater financial return under a consumer proposal than if you go bankrupt.
Once your consumer proposal is filed, your creditors must stop all collection action and the trustee will deal with your creditors.
There are a few rules.
- You can only file a consumer proposal using a Licensed Insolvency Trustee.
- Your consumer debt cannot exceed $250,000, excluding mortgages.
- The creditors must be better off than if you file bankruptcy.
- The consumer proposal cannot be for more than 5 years.
- If the creditors do not accept your consumer proposal you are not bankrupt.
Types of Personal Proposals.
There are two types of personal proposals available to individuals:
Consumer Proposals - If you owe less than $250,000 to your creditors (not counting a mortgage), you may be eligible to file a consumer proposal;
Division I Proposals - If you owe more than $250,000, or you prefer, the other type of personal proposal you can file an Ordinary or Division I proposal.
Both types of personal proposals give you a “stay of proceedings” or protection from your creditors.