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What is a consumer proposal?

A consumer proposal in Nova Scotia is a legal process which enables you to make an offer to your creditors to modify your payments or to pay them a percentage of what you owe. A proposal allows you a fresh start without going bankrupt.

You can make a proposal (or file bankruptcy) if you:

  • owe at least $1,000

  • are not able to meet your regular payments as they become due; or

  • would not be able to pay all of your debts if all of the assets you are not allowed to keep are sold

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How do I know if I qualify for a proposal?

To be eligible for a consumer proposal your debts must not exceed $250,000, excluding your mortgage. You must be able to prove to the creditors that you can reasonably meet the terms you are presenting to them - assets which could be sold to generate some cash, or sufficient income to maintain monthly payments.

How do I present my proposal to my creditors?

An administrator at a Licensed Insolvency Trustee's office will assist you in putting the proposal together. Upon receipt of your proposal, your creditors have 45 days to accept the proposal as filed or request a meeting of creditors to vote on the proposal. If the majority of your creditors accept the proposal, all of your creditors are bound by the terms.

Briefly the steps to making a consumer proposal in Nova Scotia are:

  • The Trustee will help you prepare a Statement of Affairs which lists all of your assets, creditors, income, expenses and other pertinent information

  • Your finances will be reviewed and the Trustee will assist you in preparing a proposal to your creditors

  • After you make your proposal, most creditors are no longer able to pursue you for collection of their accounts

  • Public utilities cannot disconnect service

  • You make your payments to the Trustee who will pay your creditors until the terms of your proposal have been met

  • You will be required to attend two financial counselling sessions

  • Once you have met the terms of your proposal, you will receive a document stating that you completed your proposal and you will have no further obligation for the debts covered in your proposal

Your company, partnership, or business may also file bankruptcy or make a proposal if it meets the above requirements.

However, any unsecured creditor to whom you owe more than $1,000 could try to force you into bankruptcy. In this case, the creditor must prove that you have committed an act of bankruptcy, such as not paying your bills as they came due. The court reviews the facts and, if the application is successful, issues a bankruptcy order which places you in bankruptcy by the creditor.

What will happen to my assets?

You will keep control of your assets in a proposal. However, if you are asking your creditors to settle for less, you should be prepared to "give a little" as well. That may mean selling an asset and having the proceeds form part of your proposal.

What if I find I cannot meet the terms?

If you are in default with the terms, your proposal will be annulled and the creditors can resume their legal collection actions.

What happens when the proposal is completed?

When you have fulfilled your obligations under the terms of the proposal you will receive a Certificate of Full Performance. You are then relieved of any further obligation to pay those creditors.

 

Our qualified professional Licensed Insolvency Trustees and Administrators can assist you through the proposal process.

Debt Help and Bankruptcy Call us at 902-310-6060 for a free, no obligation, confidential consultation.

» Effects of filing a consumer proposal in Nova Scotia

 

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