What happens to my debt when I file a consumer proposal?

After you file your consumer proposal, a copy of your documents is sent to each of your creditors for their consideration. This is done within 10 business days, although it often happens a lot sooner.

During this voting period, the creditors are not allowed to continue their collection activity against you. It may take a few weeks for the creditors to get all their records and computer files updated to show that you have filed a consumer proposal. But once those records are updated, you should not receive any phone calls, or letters from your creditors asking for payment on your accounts.

Should you continue to be subjected to collection activity you should record the creditor’s information and report it to your proposal administrator so they can contact them on your behalf.

After the voting period you will know if your proposal has been accepted by the creditors. If it is not accepted a negotiation process will take place. However, if it is accepted, you would continue to make your payments according to the terms you offered them in your original documents.

A consumer proposal, once accepted is a final settlement on your debts, providing you complete the terms of your proposal within the specified time frame. This means that you will not owe the balance of your debts once the proposal is completed. By accepting the consumer proposal, the creditors are agreeing to accept that anticipated payment, rather than the amount you owed with interest continuing to accrue.

This means that once the consumer proposal is completed, the difference between the amount paid in the consumer proposal and the original amount owing is not paid. It is important to understand that if you do not satisfy the terms of your proposal, and the proposal goes into default, you run the risk that the consumer proposal will be annulled. In this case you would owe the amount that you owed your creditors originally, with accumulated interest throughout the period of your consumer proposal. For this reason, if your situation changes during your consumer proposal it is important to let your administrator know right away.