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Consumer Proposals / Creditor Meetings
« on: April 15, 2015, 09:33:00 PM »
A few people have asked about the mechanics of creditor meetings and consumer proposal acceptance, so I thought I would put in my two cents. As always, please donít take my word for it and talk to a trustee and/or look at the Bankruptcy Act.

When do creditor meetings happen?
A creditor meeting to vote on a consumer proposal must be called if: Within 45 days of filing the proposal, creditors whose PROVEN claims equal at least 25% of the total PROVEN claims requests it. A creditor can file a proof of claim but decline to vote either way. This is in section 66.15 of the Act.

Why did it take so long for the trustee to know if a meeting was needed?
Letís say you have $100,000 of unsecured debt and you have an RBC Visa for $10,000 and RBC says they want a meeting. If no other claims come in, they have 100% of the proven claims. However at day 44, TD bank could vote yes and not request a meeting. This would mean that the RBC claim is only 20% of proven claims, so no meeting is needed.

What happens if nobody votes yes or no?
The proposal is approved. This is from section 66.18.

Why would a creditor not vote or not file a claim?
A variety of reasons. Some creditors donít have an insolvency department set up, they donít know how to respond to a proposal notice or depending on the level of debt that you owe, it might not be worth their time. They may have written off the debt a long time ago internally.

What happens after the 45 day period?
Assuming the proposal is accepted, there is a 15 day waiting period before court acceptance. In theory, it is possible that a creditor could ask that the bankruptcy court review the proposal, but this happens in far less than 1% of cases. This is from section 66.24.

What happens if a creditor wants to vote no after the 45 days have expired?
Nothing really, beyond going to court. As per previously, this is exceptionally rare. Also see section 66.24. A consumer proposal is a contract between a debtor and their creditors. Neither side can unilaterally make changes without consent from the other side.

What happens if I get sick and know I wonít be able to make my proposal payments?
You can ask to amend your proposal. Basically, the trustee sends out a notice saying that you would like to change your proposal in X way (often a reduction in monthly payments). The creditors are deemed to have accepted any changes that you propose after a specific interval. The rules for requesting a meeting of creditors still apply. So, it is possible to have a meaningful creditorís meeting after the proposal has already been accepted. There are a series of complications with this that I wonít cover at this point because it can be a risky process.

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