Understanding the Consumer Proposal Voting Period

Here are 5 things you probably don’t know about the consumer proposal voting process.

If you’ve been following our website, you probably already know what a consumer proposal is. A consumer proposal allows you to offer a deal to your creditors, typically for less than what you owe – but your offer is subject to a voting period.

The consumer proposal voting period lasts 45 days and gives your creditors the opportunity to review your offer and decide if they are willing to accept it or not. You will be protected during the voting period, collections and legal activity against you will stop. At the end of the voting period, if your proposal is accepted, your protection will continue. A consumer proposal can also be rejected, and in the case where no deal can be made, bankruptcy is always an option.

Here are 5 things you should know about the consumer proposal voting period to help you with your debt-free decision making process.

The Voting Period Lasts at Least 45 Days

A mandatory period of 45 days is fixed from the date that your consumer proposal is filed with the government. Your creditors are notified (most electronically) that you have filed and offered the opportunity to vote on your proposal – provided they respond within 45 days. At the end of the 45-day period you will know if your proposal has been accepted, rejected, or if a counter offer has been made.

You Need 50% of the Votes to Pass

All you need is half (50%) of the votes to say “yes” to consider your proposal accepted. How many votes does each creditor get? Every dollar you owe to a creditor is equal to one vote for them. As a result, the creditor you owe the most money to may end up with the most votes. If you owe one creditor more than 50% of the total debt you owe – this creditor will have a controlling vote. We call creditors with a controlling interest “majority creditors” because they have the majority of votes.

Family Members Cannot Vote Against Your Proposal

It’s not uncommon for a person to have a little debt to mom and dad. If you owe a family member money you can include them in your proposal (if they have documented evidence of the loan) so that they will be entitled to receive money collected by your Licensed insolvency Trustee. Family members can participate and receive dividends however, they cannot vote in favour of your proposal. “Yes” votes from family members or closely related parties cannot be counted when determining if a proposal has been accepted. Conversely, “No” votes from family do count when determining if a proposal is rejected.

Creditors Can Make a Counter Offer

The maximum timeframe for a consumer proposal is 5 years or 60 months. Consumer proposals cannot be extend beyond 5 years. However, a proposal’s monthly payment amount is up for negotiation. A creditor can make a counter offer to your proposal and ask you to increase your offer. You may choose to accept the counter offer or make a new proposed amount yourself as another counter offer. If the creditor making the offer is a minority creditor and the majority has already accepted your proposal as is.

If the Majority Says “Yes” All Unsecured Creditors are Bound 

Everyone on the list will be included if the majority of your creditors vote “for” your proposal. Under the terms of your proposal creditors are prohibited from harassing you to repay your debt(s). The exception is secured debt(s). Debts such as a vehicle loan, mortgage or small business loan. Loans secured to assets such as a car, house or business equipment will require payment arrangements to keep your assets.

If you’d like to explore a proposal we’ll give you our expert opinion on how your creditors may vote. Please call 310-4321 and schedule your FREE no-obligation consultation today. We can help you discover how great debt-free feels.