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How Creditors Vote On a Consumer Proposal

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How Creditors Vote On a Consumer Proposal

Written by Veronica Ott
Fact-checked by Caitlin Wood

How Creditors Vote On a Consumer Proposal

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Consumer Proposal Debt

If you’re considering a consumer proposal, or are in the midst of one, you may be wondering how the voting process works. The voting process is quintessential to a consumer proposal because it can dictate whether your terms are accepted or rejected. The goal is to have your terms accepted, so naturally, the voting process can be nerve-wracking. 

To put your mind at ease, you can learn more about how creditors vote during a consumer proposal in this article. Knowing how the process works will allow you to manage your expectations and understand what level of power creditors have in a consumer proposal. 

What Does The Voting Process Look Like?

Before the consumer proposal even happens, keep in mind that you’re protected. Once your consumer proposal has been filed by your Licensed Insolvency Trustee it is registered with the government. After which a stay of proceedings comes into place. This means that creditors must halt further legal action, such as phone calls, demand payments, and collection letters. You may also stop making payments toward your creditors at this point. 

After your proposal has been filed, the voting process starts. All unsecured creditors will receive a copy of your proposal after it’s filed. Generally, creditors will vote to accept if the offer provided in the proposal is better than what they would receive if you filed for bankruptcy instead. All creditors involved in the proposal have the right to vote to either accept your proposal or reject your proposal. 

All creditors must vote on your proposal terms within 45 days, starting from the day your consumer proposal was filed. Keep in mind that, it is not 45 business days, but 45 days total.If a meeting is requested by creditors, the votes will be counted. The number of “accept” and “reject” votes will determine the outcome of your proposal. If a meeting is not requested, your proposal will be automatically accepted at the end of the 45 day period. 

What Is a Meeting Of Creditors?

A meeting of creditors is held only when one or more creditors, who individually or collectively hold 25% of your debt, request a meeting. Your Licensed Insolvency Trustee will have 21 days to hold the meeting to review and discuss the consumer proposal terms

To understand the circumstances, here’s an example. If you owe $20,000, creditors holding $5,000 or more of the debt have to request a meeting in order for a meeting to take place.

If a meeting is called, your creditors will need to finalize their votes for the day the meeting is held. Even though creditors have the right to show up at the meeting, they often don’t. Instead, the meeting of creditors is often seen as a technical term to describe the vote count. 

Why Is The Meeting of Creditors Important?

A consumer proposal involves two interlinked steps, the meeting of creditors and the voting process. If no meeting is required, votes to accept or reject a consumer proposal are not considered and your consumer proposal will automatically be accepted. If a meeting is required, the votes are counted which could mean that a proposal could be rejected

For this reason, creditors typically only request a meeting if they’re intending to decline the proposal. However, in order for a creditor to be able to call a meeting and reject your proposal, they must hold 25% or more of your total debt. 

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Which Creditors Get To Vote?

Each of your creditors receives 1 vote per dollar of debt you owe them. For a vote to count, a creditor must submit a legitimate Proof of Claim that demonstrates you are in debt to them. On the 45th day of the consumer proposal, all claims will be reviewed by your trustee to see who’s eligible to vote. 

A family member can also submit a claim in the proposal to receive a portion of the money.  Anyone who is related (marriage, common-law partnership, blood relative, adoption) to the debtor has to follow special rules, they can only not vote or vote against. 

Creditors may take any of the following steps when considering your consumer proposal: 

  • Accept your filed terms (yes vote)
  • Reject your filed terms (no vote)
  • Reject your filed terms and then ask for a creditors meeting
  • Do nothing (this does not stop a creditor from receiving money from the consumer proposal if it is accepted, but they must file a claim.)

Can you amend your consumer proposal? Find out here.

What Happens If The Majority Of Creditors Vote No? 

If a vote is held and the consensus of the vote is “no”, the process doesn’t end yet. In the majority of cases, creditors will request an adjustment to the original terms you offered. They do this because they know that if you declare for bankruptcy instead, they will likely get less than what you offered in the proposal. The adjustment a creditor requests could be more money per month or a change in the length of the payment plan. If you agree to the new terms, the consumer proposal will be accepted as revised. 

If the new terms are not acceptable to you, you can make a counteroffer back to the creditors. If the counteroffer you make is rejected, you have the following options:

  • Renegotiate the terms of your proposal with creditors
  • Withdraw your proposal and pursue another debt relief option
  • Withdraw your proposal and file for bankruptcy
  • Withdraw your proposal and file again in the future. It’s best to wait a minimum of six months before preparing another proposal because if you file before the six-month mark the automatic stay of proceedings does not apply. 

Can you pay off your consumer proposal early?

Fair Proposals Are Good Proposals

To avoid your proposal getting rejected, it’s best if you can prepare a proposal that is fair when considering the debt you owe and your financial circumstances. The point of a consumer proposal is to make a deal with your creditors that falls somewhere in the middle between what you want and what the creditors want. If you’re interested in being matched with a debt professional who can find you the right debt relief product, Loans Canada can help.


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