Filing a proposal, specifically a consumer proposal to deal with debt, involves several key steps and typically requires working with a Licensed Insolvency Trustee (LIT). Here's a breakdown of the process:
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Consult a Licensed Insolvency Trustee (LIT): The first, and arguably most important step, is to make an appointment with a LIT. They are the only professionals authorized to administer consumer proposals. They will assess your financial situation and explain all available debt relief options, including bankruptcy, so you can make an informed decision. BDO Debt Solutions is one example of a firm offering these services.
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Understand All Debt Solutions: Your LIT will help you explore all possible avenues for managing your debt. A consumer proposal is just one option, and it's crucial to understand how it compares to others, like debt management plans or bankruptcy.
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Prepare the Consumer Proposal: Working closely with your LIT, you'll develop the terms of your consumer proposal. This includes determining how much you can realistically afford to pay back to your creditors over a specific period (up to five years). The LIT will help you structure the proposal in a way that is attractive to your creditors while remaining manageable for you.
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File the Proposal: Once the proposal is prepared, your LIT will file it with the Office of the Superintendent of Bankruptcy (OSB). This automatically puts a stay of proceedings in place, meaning creditors must stop collection efforts, including lawsuits and wage garnishments.
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Potential Meeting of Creditors: Your creditors will review the proposal. They may request a meeting to ask questions or negotiate the terms. Your LIT will represent you during this meeting.
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Creditor Approval: For the proposal to be accepted, a majority in number representing two-thirds in dollar value of your creditors who vote must accept it. If accepted, the proposal becomes legally binding on all your unsecured creditors, even those who voted against it.
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Make Payments: You will then make payments as outlined in your accepted consumer proposal to your LIT, who will in turn distribute the funds to your creditors.
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Pay your LIT: This is incorporated into your monthly repayment.
In summary, filing a consumer proposal is a structured process managed by a Licensed Insolvency Trustee, involving assessment, preparation, filing, creditor review, and finally, execution of the repayment plan.
