Recently, many bankruptcy trustees have started calling themselves consumer proposal administrators without actually explaining what that term means. As the name suggests, a consumer proposal administrator manages the consumer proposal process. To the best of my knowledge, the government has not issued any consumer proposal administrator licences in Canada outside the process of licensing a bankruptcy trustee. The Bankruptcy and Insolvency Act allows for this type of licence to be issued, but to date, only trustees in bankruptcy may perform this service.
Probably the easiest way to understand what a consumer proposal administrator does is to describe the consumer proposal process. In simple terms a consumer proposal administator:
- helps you decide if a consumer proposal is your best option;
- helps you negotiate a deal with your creditors;
- deals with the paperwork;
- deals with your creditors;
- collects and remits proposal payments;
- closes the file.
Below, I’ll explain what the person filing has to do, what the creditors are required to do, and what the administrator does.
Initially a person has to determine that a consumer proposal is the correct solution to their financial problems. This is usually done with the assistance of a licensed trustee in bankruptcy. Your trustee is required to explain to you all of the possible strategies that might help you solve your financial problems – you then decide which one makes the most sense for you.
The first responsibility of the consumer proposal administrator is to assist you, the debtor, to assemble the information required to file a consumer proposal. This includes a list of the things you own (assets), the debts you owe (liabilities), a statement regarding your current financial conditions including a budget that sets out your monthly income and expenses.
Based on this information, the administrator will suggest possible repayment terms to be offered to your creditors. The terms are used to prepare the consumer proposal document. It is important to note that the administrator’s job is to assist – the information and the proposal are your responsibility as the person filing the consumer proposal.
Once the required information has been assembled, the proposal administrator will prepare the documents you, as the debtor, are required to sign in order to file your proposal. Once the documents have been signed, the administrator files them with the government. Within 5 days of filing the proposal, the administrator is required to forward a copy to all of your creditors. From the date of filing the proposal you are not required to speak directly to your creditors, if you don’t want to. If you have creditors calling you the best way to stop the calls is to answer the call and give the creditor the name of your administrator – part of the administrator’s job is to deal with your creditors.
Speaking of your creditors, they have 45 days to respond to the notice sent by the administrator. They may agree, disagree or counter the offer that was made in the proposal. The administrator is required to process the creditor’s responses and determine if the proposal has been accepted as filed, or if a meeting must be called to negotiate new terms. If a meeting is required, the administrator is responsible for setting the time, place, and conducting the meeting.
Assuming the proposal has been accepted (and the vast majority are), the administrator is responsible to collect and hold the debtor’s payments. When the payments accumulate to an amount set in the proposal, the administrator is responsible for dividing the funds up and sending cheques to all of the creditors that have responded.
After you make your final payment, the administrator is responsible to close the file with the government and the creditors.
Hopefully, this article clarifies the administrator’s role in a consumer proposal – if you still have questions or concerns make certain you discuss those concerns with your bankruptcy trustee (the consumer proposal administrator) before you file. To find a ‘consumer proposal administrator’ in your area, contact a local bankruptcy canada trustee.
Can I negotiate direct with creditors, to offer a lump sum , say 1/3 of the total. Without having to go through a trustee?
Hi Bill. Yes, you can negotiate directly with creditors. Whether or not they accept your offer is between you and them. If they do agree to a settlement, be sure you get it in writing so that it’s legally binding.
Unless your debts are very old (say over two years since you last made a payment), it may be difficult to get the creditors to agree to a settlement. Also, if you have more than one debt, it may be difficult to get all of your creditors to agree to a settlement, which is why a consumer proposal is often a good alternative. In a consumer proposal, if more than half of the dollar value of your unsecured creditors agreed to the deal, everyone has to accept it, which is easier than attempting to negotiate with multiple creditors individually.
Hi, if your biggest creditor doesn’t respond a yes or no to your proposal does the decision fall back to your remanding creditors? For example, I have 4 small creditors and 1 big one…so far the 4 small one’s voted no and the big one has responded yet.
Hi Brenda. Yes, the consumer proposal administrator only counts the votes of the creditors that vote, so it is possible that the 4 small ones will determine the outcome of your proposal if the big one doesn’t vote.
I need to have a certificate of full performance of consumer proposal filled out in order to get a mortgage. I never received one just a letter of discharge
I have a PDF copy of the form Can I get Grant Thorton my administrator of the consumer proposal fill it out?
Is a discharge from the CP legal proof of full payment?
I need this for my mortgage application which needs to finalized by 30 September..please help
Hi Catherine. Yes, you should immediately contact your consumer proposal administrator and ask them for your Certificate of Full Performance. Assuming your proposal is completed they should be able to email it to you immediately.