A consumer proposal is a formal offer made to creditors to settle debts for less than 100 cents on the dollar. It can be accepted or rejected by the creditors who participate in the voting process. Thankfully, it’s very rare for a consumer proposal to be rejected outright. Most of the time, creditors who vote against a consumer proposal are willing to negotiate a compromise.
Creditors have 45 days from the filing of a consumer proposal, to vote on whether or not they want to accept the terms. After considering the consumer proposal, each creditor will likely do one of the following:
- Vote for the consumer proposal as filed;
- Vote against the consumer proposal;
- Vote against the consumer proposal and ask for a creditors meeting; or
- Do nothing.
In most cases, creditors who vote against a consumer proposal will provide their own counter-offer with their voting letter. If a counter-offer comes in, your Trustee will discuss it with you and you can decide whether or not to accept the counter-offer, reject the counter-offer, or submit a further counter-offer back to the creditor. The terms can then be renegotiated and the creditors would get another chance to vote on the amended proposal.
It’s very rare that a creditor would vote against a consumer proposal outright, and not be willing to come to a compromise.
If you are considering a consumer proposal, first talk to the professionals at D. thode & Associates Inc. to discuss a plan that will work for you and for your creditors.