Personal (Consumer) Proposals
(Avoiding Bankruptcy Toronto)
David Sklar and Associates serves South Western Ontario and the Greater Toronto Area assisting with bankruptcy in Ontario Canada, helping people file bankruptcy Toronto. Below you can find information on our Personal (Consumer) Proposals. If you have any questions, please contact us today! We have four locations waiting to serve you.
What is a Proposal?
A Proposal is simply an agreement between a person and his creditors whereby the person pays only a portion of his debts, thus avoiding bankruptcy. A proposal is made to the creditors through a Trustee. If the creditors vote in favour of the proposal, then the proposal is a binding contract, which all creditors must accept even the creditors who did not vote for the proposal.
Proposals are a better deal for the creditors than bankruptcy and in the vast majority of cases are accepted!
How Do I Qualify for a Proposal?
Your debts, excluding those on your home, must be less than $75,000.00. If more than $75,000.00, you can file another proposal called a DIVISION I PROPOSAL. (see below...)
How Does a Proposal Help Me?
The filing of a Proposal stops all legal actions undertaken or contemplated by unsecured creditors.
The filing of a Proposal gives the debtor some "breathing space" so that he can approach the creditors and explain his financial situation and ask for support.
Filing a Proposal Under the Bankruptcy and Insolvency Act
Key Issues
- A Proposal in Canada can only be filed through a Trustee in Bankruptcy.
- A Proposal is simply an agreement between the debtor and his creditors.
- The filing of a Proposal stays all Legal actions undertaken or contemplated by unsecured creditors.
- Secured creditors are not bound by the terms of a Proposal and therefore must concur in the filing of the Proposal.
- The creditors must be better off under a Proposal than under a bankruptcy.
- Creditors vote on the Proposal.
- The Trustee must file a report to the creditors on the affairs of the person and the causes of financial difficulty.
- In order to be accepted by the creditors, the Proposal must receive approval by at least 50% plus one in dollars of eligible creditors who vote.
- If the Proposal does not receive the required votes, the rights of the creditors are restored as if the Proposal were not filed at all.
When May a Proposal Be Better than Bankruptcy?
- Where the insolvent finds bankruptcy unacceptable.
- Where the insolvent wishes to continue in business and will be prevented from so doing if
obliged to disclose that he is a bankrupt when dealing with third parties.
- Where professional accreditation may be lost or put at risk by a bankruptcy.
- Where a bankruptcy will result in a secured creditor acting on its security.
- Where the insolvent wishes to retain some key asset (e.g. a home or impending inheritance).
- Where the insolvent has previously been bankrupt.
Division 1 Proposal
Key elements
- Your debts other than those on your home exceed $75,000.00.
- In order to be accepted by the creditors, the Proposal must receive approval by at least 66.6% (2/3) in dollars and 50% plus one in number of eligible creditors who vote. The Proposal must then be approved by the Court
- If the Proposal does not receive the required votes, the individual is immediately bankrupt effective on the date of the creditors meeting (held within 3 weeks of filing the Proposal).
- Once the Proposal is approved by the Court then all unsecured creditors are bound by the Proposal; not just the creditors who voted in favour of the Proposal.
- If the terms of the Proposal are not honoured, then the Trustee or a creditor may apply to Court for the Proposal to be annulled and the person placed into bankruptcy.
This web site is designed to provide general information only. It is not intended to provide insolvency advice and should not be acted on without further consultation with professional insolvency advisors. We welcome you to contact us with any questions you may have. This way we may address your particular concerns or circumstances.