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My Creditors Refused My Consumer Proposal: Now What?
August 1st, 2013
Generally speaking, creditors will accept a consumer proposal that is reasonable. They’ll have done their calculations (just as your trustee did) and determined that they stand to gain more from a proposal than they might if you become bankrupt. Occasionally, however, the majority of your creditors will decide that a proposal is not in their best interests and they will refuse it.
If that happens, the matter ends there: unlike a Division I proposal, refusal of a consumer proposal does not result in automatic faillite. Because you cannot file another proposal once yours has been refused, however, faillite may still be the logical next step. Your trustee will be able to advise you on what’s best for you.
You can lessen the possibility that creditors might refuse your consumer proposal by working with your trustee to create a reasonable proposal in the first place. If a creditor meeting is called, be open to negotiation with your creditors if necessary (your trustee will attend the meeting with you to assist with this). Remember that in most cases, a consumer proposal is preferable to a faillite not just for your creditors, but for you. A successful proposal will usually allow you to keep assets such as your home and car, and it will have a lesser impact on your credit rating.