Proposals to creditors

A proposal is a negotiated agreement (“debt settlement agreement”) between you and your creditors concerning your obligation to pay off a portion of your debts, usually over a period of time. In determining whether a proposal is appropriate, your assets, liabilities, and income and expenses must be considered. 

The filing of a proposal automatically stops your creditors from continuing collection actions.

For a proposal to be accepted by your creditors, it must pay out a greater amount to the unsecured creditors than would a bankruptcy. Typically, a proposal should pay out greater than $.20 -$.25 on the dollar in order for it to be acceptable. However, each proposal will be judged on its own merits. You will not require 100% acceptance in order for a proposal to be accepted; however, you will require the majority of creditors to accept. 

If the proposal is accepted by your creditors and approved by the Court (if applicable), the proposal is binding on all of your creditors. When the terms of the proposal are fully performed, you will be relieved of the debts that were in the proposal except those debts that survive. See What debts survive the bankruptcy or proposal process?

If you choose to go bankrupt when you had the ability to file a viable proposal, the Trustee is required to oppose your discharge from bankruptcy and seek a conditional order of discharge. This will likely mean additional payments to your bankruptcy estate for a period subsequent to the normal ninth-month date for first time bankrupts.

A Consumer Proposal (Division II) may be appropriate for individuals with debts of less than $75,000, excluding a home mortgage. If a Consumer Proposal is rejected, you will no longer be protected by the Act.

If your debts are in excess of $75,000, the proposal must be made under Division I of Part III of the Bankruptcy and Insolvency Act. A Division I Proposal requires different duties to be performed and reports to be filed; however, the idea of settling the debt is the same.

For more information concerning a proposal to your creditors, please contact us to set up an appointment with one of our staff members. We will review your situation in detail and go over all of your options. Prior to meeting with us, please complete our Insolvency Questionnaire, which may be downloaded from this site.

Download Personal Adobe PDF Forms (please allow for download time):

Consumer Bankruptcy Information

Personal Bankruptcy Questionnaire

Income and Expense Form

List of Creditors

Download Business Adobe PDF Forms (please allow for download time):

Required Corporate Information