Creditors Rejected My Consumer Proposal: What Happens Next?
Though consumer proposals do get rejected on very rare occasions, not to worry if yours is not accepted! After filing a proposal as a consumer, your creditors have 45 days to take a vote on the proposal submitted. Creditors may choose to take one of the following actions after mulling over the terms of your proposal:
- Accept every term you’ve provided, including the length of time you’ll be making payments for.
- Vote against your proposal and reject it completely.
- Hold a meeting after rejecting your proposal.
- Not do anything at all.
Votes are only counted if a creditors’ meeting takes place and that’s the only time when your creditors may reject your proposal terms. However, if no meeting is held, that makes your proposal automatically accepted. Many consumers find this arduous process helpful because it allows them to get a word in and renegotiate the terms of their debt.
One Vote Against A Proposal Is Not The End!
Whether consumer proposals are accepted or rejected requires all creditors to vote on their answer. For every dollar owed, a creditor is allowed one vote. This means that if more than half of the creditors vote in favor of your projected proposal, the one vote against holds no meaning. There’s only one opportunity for a creditor to have major sway in whether or not your proposal is accepted, and that’s if they own more than 50% of voting claims filed.
What Happens If The Majority Votes Against Me?
Even if the majority of the creditors are not in favor of your proposal, it doesn’t necessarily mean the end of the line for you. Creditors will more often than not ask for an amendment to the proposal because it allows them to prevent you from filing for bankruptcy. When you file for bankruptcy, it means the creditors receive even less money than what’s outlined in your proposal. Usually, the amendment requires you to pay an additional few dollars each month, or they may opt to alter the length of the proposal’s payment terms. Do bear in mind that your proposal can’t last more than 5 years or 60 months. Should you agree to the amendments asked for by your creditors, they will accept your proposal as revised. Even if you choose not to accept the newly revised terms, they can make a counteroffer to you.
There are several steps that you can take in the odd event that your proposal is altogether rejected.
- Renegotiate the proposal terms such as the length of time that payments are made for.
- Completely withdraw the proposal and choose to file for bankruptcy instead.
- Opt for a different kind of debt relief such as credit counseling, employ a debt management plan or choose to pay the debt off on your own terms.
- You may also completely withdraw your proposal and choose to file another one. However, it is worth considering that you should wait at least 6 months before your next filing as it means the Bankruptcy & Insolvency act will protect you to its fullest extent.
The best course of action, as long as you can reasonably do so, is to simply work with your creditors to amend the terms of your proposal. It is less stressful to work with the creditors and also less time-consuming as it prevents your proposal from being rejected altogether.
Are you afraid of your consumer proposal getting rejected? If so, hire the help of a trusted consumer proposal administrator. A professional will help you explore exactly what all of your options are, and they can aid you in coming up with terms that respect your financial situation and what you can afford.