1. The initial meeting with the Trustee
An initial meeting with a trustee in bankruptcy is essential so that he can evaluate your needs, your financial situation, your debt level, and other aspects of your case.
Following this meeting, the trustee will know if a consumer proposal is an ideal solution for your situation.
2. Evaluation of eligibility for a Consumer Proposal
Even if it is advantageous, a consumer proposal is not available to everyone. You must be eligible and your situation must be suitable.
The trustee will evaluate your eligibility and the feasibility of a proposal in your situation.
3. Drafting the consumer proposal and signing the documents.
Once you are found eligible and the trustee believes a consumer proposal is in your best interest, he will prepare the proposal and have you sign the relevant documents.
The offer for the creditors must be reasonable, otherwise, they may reject it.
4. Filing the proposal with the OSB and freezing the proceedings.
The trustee will file the consumer proposal with the Office of the Superintendent of Bankruptcy (OSB), which automatically results in a “freeze on proceedings”.
This freeze prevents creditors from taking collection action against you as long as the proposal is not refused. If the proposal is accepted, the protection will continue to apply.
5. Sending the notice to the creditors.
At this stage, the trustee sends a notice to the creditors to inform them that a consumer proposal has been filed. This notice is sent to creditors within 5 days of the proposal being filed with the TSO.
6. Creditor Vote on the Proposal (Within 45 days)
From the time they receive the proposal, the creditors have 45 days to accept or reject the offer submitted to them.
In their response, the creditors also have the right to request that a meeting be held. A minimum of 25% of the creditors must vote in favour of such a meeting which in practice very rarely occurs.
7. Mandatory meetings with the trustee in bankruptcy
Before you can be discharged from a consumer proposal, you must attend two mandatory meetings with a trustee.
These meetings serve to educate you on the proper financial habits to adopt to prevent a repeat of your debt situation.
Topics such as the use of credit, budgeting, and other aspects of personal finance will be discussed.
8. Court Approval and Release of Debts
The last step is court approval. The important thing to know is that you will not have to go before the judge.
If no creditor objects to the proposal within 15 days of its approval by the other creditors, it is considered automatically accepted.
Once these steps have been completed, your consumer proposal is in place and all that remains is to respect its terms. Once the proposal is paid in full, you will be free of your debts!