Consumer Proposal: Interest Relief
When you file a Consumer Proposal, there is a stay on all legal proceedings that your creditors can take against you. Interest on all debts stop as of the day the court accepts the Consumer Proposal and confirms the appointment of your Licensed Insolvency Trustee who acts as the Administrator of your proposal. If the creditors accept the offer in your proposal, then your only obligation to make payments in accordance with the terms of the proposal, which may or may not include an interest factor. If the creditors refuse your proposal, then you have options. Normally, your trustee will contact the creditors who refused to agree to your proposal and ask what they would accept in payments to change their vote from “no” to “yes.” This may take several months of negotiating back and forth. You want to pay as little as possible. Your creditors want as much as possible. Somewhere in the middle is – what is reasonable in the circumstances.
In circumstances where no proposal can be negotiated with the creditors and the proposal (and any amended proposals) is refused by a majority of creditors, then you, as the proponent (the debtor) are back at square one. The full rights of all creditors are reinstated and their right to claim interest is back to the day you filed the Consumer Proposal when the interest was stopped. If you subsequently file another proposal or a bankruptcy, the interest stops again.
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