Ask the Expert – Consumer Proposals
This past Saturday, Doug Hoyes and I spent an hour doing an Ask the Expert show on AM 570 News. The hour focused on Consumer Proposals. In short, a Consumer Proposal is a legal process in which individuals offer to repay a portion of their unsecured debts. This is acheived by making one monthly payment over a period of time that does not exceed 60 months. At Hoyes, Michalos and Associates Inc in Kitchener, we file on average 1 consumer proposal for every 2 personal bankruptcies. A couple other key features of a consumer proposal are: an individual can keep his/her asset(s) and an individual receives the same protection from the creditors as that in which is available in a personal bankruptcy.When a consumer proposal is offered to the creditors, it is automatically accepted unless the majority of the credito’s dollar value vote not to accept the proposal. This vote must be received by the 46th day. Generally if the creditor votes no, they will offer an alternative amount at which point the individual can accept. From our experience, almost every proposal offered gets accepted (either as filed or with a counter offer).
Let’s consider an example of a recent consumer proposal that we offered in our Kitchener office today:
· Married couple with 2 children;
· The family of 4 makes $4,500/month of take home income (no more overtime is available at their work);
· They own a home in Kitchener, with $8,000 of equity (estimated amount after selling costs);
· They have 57,000 of credit card and line of credit debts;
· They have 2 automobiles, one has a loan and the other is older and owned out right(without any liens against it);
· The debts were accumulated over the past 5 years since they purchased the home and started their family.
· We filed a consumer proposal to the unsecured creditors offering $400/month for 50 months = $20,000.
· After the proposal was filed, the couple’s monthly budget was balanced, they were able to keep their house and vehicles, and the financial pressure was eased.
· Married couple with 2 children;
· The family of 4 makes $4,500/month of take home income (no more overtime is available at their work);
· They own a home in Kitchener, with $8,000 of equity (estimated amount after selling costs);
· They have 57,000 of credit card and line of credit debts;
· They have 2 automobiles, one has a loan and the other is older and owned out right(without any liens against it);
· The debts were accumulated over the past 5 years since they purchased the home and started their family.
· We filed a consumer proposal to the unsecured creditors offering $400/month for 50 months = $20,000.
· After the proposal was filed, the couple’s monthly budget was balanced, they were able to keep their house and vehicles, and the financial pressure was eased.
If you would like to discuss a consumer proposal in more detail call me at 519-747-0660 or 310-PLAN or e-mail me.
posted by Scott Schaefer, CA CIRP @ 9:00 PM
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