Can Your Filed Consumer Proposal Be Rejected By The Canada Revenue Agency?

The world doesn’t end after bankruptcy. It will be hard to fathom, but 1 in every 6 Canadians are either going through bankruptcy or will declare bankruptcy at some point in their lives.

A number of debt repayment plans, such as debt consolidation is one option. Another is a consumer proposal, which makes more sense if you owe personal debt that doesn’t exceed $250,000.

Consumer proposals are filed with the Canada Revenue Agency. One question that our credit counsellors are often asked is: can the CRA reject our filed proposal?

Consumer Proposal – What Is It?

It’s a formal and legally binding procedure, administered by a Licensed Insolvency Trustee. The LIT works with the individual filing the consumer proposal and develops the proposal that includes terms of debt repayment. The proposal is sent to all creditors via the Office of the Superintendant of Bankruptcy (OSB) for reviewing.

Other Important Factors

  1. Consumer proposals work for a term of 5 years only
  2. Payments aren’t made directly to the creditors
  3. Creditors have 45 days to accept or reject a proposal

Acceptance, Rejection Of Your Consumer Proposal…And the CRA

2222The fate of your financial situation is literally in the hands of your creditors. To be accepted, majority of the creditors will vote on the proposal. Note: the amount of debt owed will also be considered.

The CRA is only one creditor, albeit a major one. They can also vote whether to accept or reject any proposal, but do they have enough authority to reject one proposal? No, they don’t. That is unless the CRA credited majority of the amount of total debt owed by the individual.

The CRA can accept or reject a consumer proposal. If their individual debt claim represents majority of debt (based on dollar amount) then only can the CRA reject a proposal.

Keep the following in mind when filing your consumer proposal: Are all your tax returns current and up to date?

This is the best way to avoid delays in the approval (or even filing) process of the consumer proposal. Delays in properly filing tax returns will result in proposal rejection by the CRA or other creditors.

Are you dealing with debt and bad credit? Do you want a way out? Consumer proposal can help. However, it’s in your interests to discuss all other options. Get out of debt today with help from EmpireOne.



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