This is an arrangement with your creditors on an informal basis, which might include making full payment (or less) of your debts to your creditors over time. This process has the following difficulties:

• Getting 100% agreement from your creditors.
• There is no binding timetable that forces creditors to decide.
• Creditors may still refuse to be part of the process and still harass you.

This process is an act of bankruptcy and could be used by your creditors to request the courts to put you into bankruptcy.

FORMAL ARRANGEMENTS-BINDING BY LAW

Under the Bankruptcy & Insolvency Act, there is a procedure called a Proposal which, if passed by your creditors, will bind your creditors and avoid bankruptcy.

The key points to making a formal Proposal successful are:

• Obtaining the acceptance of 50% plus 1 creditor, representing over 66% of proven creditor claims. Under a formal Proposal, you do not require 100% acceptance by your creditors.
• The payment to creditors under a Proposal must be greater than they would receive from a distribution of your assets in a bankruptcy.

For further information, see Consumer Proposals.

BANKRUPTCY ~ LAST RESORT!

If there is no chance of making a successful arrangement with your creditors, then bankruptcy may be a last resort.

Click here to download a personal bankruptcy/consumer proposal questionnaire.

If you experience difficulty in downloading the file, please e-mail or contact us.