When you file a consumer proposal, your creditors are entitled to vote for or against the acceptance of your consumer proposal. Creditors have 45 days to vote on whether they will accept the terms that you offer them as settlement on your debt in full.
When clients hear that, their first instinct is to worry. They worry that their consumer proposal will be rejected.
The good news is, rejection is uncommon. Creditors accept the majority of consumer proposals either as originally presented by the debtor, or with some increase in the payment terms. Generally the only proposals that are rejected outright occur where the creditors have concerns about the debtors’ behavior prior to the date of the proposal. These concerns cover areas such as fraud, reckless behavior, gambling, etc.
Canada Revenue Agency is the big exception. CRA is not always motivated by “business decisions” and although a proposal may bring significantly more money to them than a bankruptcy would, they sometimes vote to “uphold the integrity of the Income Tax System”.
If you’re considering making a consumer proposal, but are worried that it will be rejected, come and see us. We can discuss your situation and decide together if filing a consumer proposal is right for you.