Filing a Second Consumer Proposal
Many people wonder if you are able to file a second consumer proposal. As with most financial and legal matters, this will depend on the particulars of your financial situation. If you have filed a consumer proposal in the past, completed the proposal and then ended up struggling with new debt later on, you are able to file a second consumer proposal.
This is an unfortunate situation where a person who has worked to eliminate their debts through a consumer proposal once again ends up in financial trouble. Since these are brand new debts that are not related to the previous proposal, and you have completed the other proposal, you are able to file a second consumer proposal.
However, you may not have two proposals open at the same time. In order to file a second consumer proposal, you must have been discharged from the previous proposal. Even if these are new debts, you are unable to file another consumer proposal until the previous proposal is completed.
If you were in a consumer proposal that was not completed and you incur new debts which again you cannot repay, then it would be difficult to file a second consumer proposal, unless you made an arrangement to pay off the creditors of the first proposal. In this instance it may be that you have to file a bankruptcy to eliminate all of your debts If you miss three consumer proposal payments ( and you have not brought them up to date), your proposal will be annulled. This means that your creditors will be free to take legal action against you to collect on the full amount of the debt that you owe them. In many cases, a person who is unable to make their consumer proposal payments and who has their proposal annulled will be forced to file for bankruptcy in order to handle the situation.
Bankruptcy is another legal process. It provides “honest yet unfortunate debtors” with the opportunity to eliminate most (and, in many cases, all) of their debts and start fresh. A bankruptcy is administered by a licensed insolvency trustee. You can be discharged from bankruptcy in as few as nine months, depending on your particular financial situation and whether or not you need to make surplus income payments. A bankruptcy remains noted on your credit report for six years after you have been discharged, if it is your first bankruptcy.
Consumer Proposal Details
In general, most consumer proposals are completed within one to five years. You will detail the length of the proposal when it is filed. However, you are able to pay the proposal more quickly if this is possible for you. A consumer proposal remains noted on your credit report for three years after you have been discharged.
When you file a consumer proposal, you must do so with a licensed insolvency trustee, who will act as your proposal administrator. The trustee will determine what a fair offer to your unsecured creditors will be. He or she will then send this offer to your creditors to vote on. They will have 45 days to do so. If the majority of your unsecured creditors vote to accept your proposal, then all are bound by its terms. If the creditors reject the proposal, you are able to resubmit the proposal with different terms in order to get the proposal accepted. This is not considered a second consumer proposal, but instead a revision of the initial proposal.
During the consumer proposal process, you will make the agreed-upon payments to your trustee who will distribute them to your creditors. You will also be required to attend two financial counselling sessions. The goal of these sessions is to teach you budgeting and financial management strategies. These sessions will help you avoid financial trouble in the future, so that you will not end up in a situation where you need to submit a second consumer proposal or file for bankruptcy.
After Consumer Proposal
After your consumer proposal is complete, you can begin to rebuild your financial future. This will include taking steps to rebuild your credit rating. You will learn tips on how to do this during your financial counselling sessions.
If you take the right steps after your consumer proposal is complete, you will be able to improve your credit rating and get control of your financial life. This will help you avoid future debt troubles and keep you from being in a situation where you will need to file a second consumer proposal.