Creditors Must Vote to Accept
If you have filed a proposal, you should have been told by your trustee that the creditors must vote to accept your offer. The creditors can vote “yes” or “no” or ask for an adjournment of the vote while they consider their position or ask you to supply them with more information. What do they consider when looking at your proposal? You spend hours putting together information and signing papers at the trustee’s office and – guess what – the creditor reviews proposals at the average rate of five (5) per hour. Not much time for you to convince them to accept your offer.
The first thing they look at is the amount that you are offering – obviously, the more you offer, the better your chance of success. The reason why you are in a financial difficulty is very important. Is your problem long term (e.g. medical, psychological, etc.) or short term (e.g. unemployment, divorce, separation, short-term injury, etc.) or somewhere in between. The creditor will review your history of payments. You will not get much sympathy if you stopped making payments two (2) years ago but only became unemployed four (4) months ago. Some creditors such as Canada Revenue Agency (CRA) have information on their computer system such as the purchase of RRSP’s, RESP’s, investments that the average creditor does not have access to. A quick note regarding Canada Revenue Agency. If you are filing a proposal and Canada Revenue Agency is a creditor, please make sure that all of your tax returns have been filed up to date. CRA wants to know how much you owe (with interest and penalties) before they decide on whether or not to vote “yes” on the proposal.
One final thought. The size of your proposal and the amount of your debt to each creditor does matter. If you owe $100,000 total but it is split between 50 creditors @ $2,000 each, no individual creditor is going to spend too much time to evaluate your proposal. The next person could owe the same total of $100,000 debt but owes $20,000 to each of five (5) creditors. Each of these creditors will, of course, spend extra time to review your proposal simply on the basis of the size of your debt.
When putting together a successful proposal or debt consolidation offer to your creditors, everything is important. There is your current status, history with your creditors, future prospects, family situation, value and type of your assets and whether or not you lose any assets in your bankruptcy, all of which must be considered when preparing and submitting your proposal to your creditors. The skill an reputation of your trustee has been earned over many years of experience in dealing with creditors. Take advantage of that experience and knowledge when you are putting together your proposal. The trustee usually has a good idea of which creditors will vote “for” your proposal and which creditors will vote “against” the proposal. Remember, the creditors have no animosity against you personally. It is all about the money that they will lose in accepting your offer to settle.
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.