Do I Have To Meet With My Creditors If I File A Consumer Proposal Or Personal Bankruptcy?
It is uncommon for a consumer to have to meet their creditors, in person or virtually, whether they file a consumer proposal or a bankruptcy. However, there are instances where this may be necessary.
This possibility arises when a Meeting of Creditors is held. These occur at varying timelines depending on whether you file a proposal or bankruptcy. The purpose of these meetings is to allow creditors an opportunity to consider your affairs, affirm the appointment of your trustee, give directions to the trustee, and vote on any motions.
While this opportunity exists for creditors, it is fairly uncommon for creditors to attend these meetings virtually (via phone), and even more unusual for them to attend in person. In our experience, the only creditor who attends creditor meetings with any regularity is CRA when larger amounts are owing to them.
In most instances, a creditor who intends on participating in the meeting of creditors will advise your Licensed Insolvency Trustee ahead of time who will subsequently advise you.
Before we dive into the topic deeper – we typically recommend against determining whether bankruptcy or a consumer proposal is worth it purely based upon the requirement for a meeting of creditors.
Proposals
There are two types of proposals that each have different rules surrounding creditor meetings.
Consumer Proposal
In a consumer proposal, a creditor meeting is only required if 25% of creditors, in total dollar value, request a meeting prior to the expiry of the first 45 days following the filing of your consumer proposal.
If this occurs a creditor meeting will be held within 21 days of the 45th day.
Division 1 Proposal
When filed, a mandatory meeting of creditors occurs no more than 21 days after the filing of the Division 1 Proposal.
Bankruptcy
Bankruptcies are handled differently depending on the anticipated realizable assets that you possess. If you have more than $15,000 of realizable assets your bankruptcy would be dealt with as an Ordinary Bankruptcy administration, and if you have less your bankruptcy would be treated as a Summary Bankruptcy administration. Learn more about the different types of bankruptcies here.
Ordinary Administration
In an ordinary administration, a meeting of creditors is to be held within a 21-day period following the date you file your bankruptcy.
Summary Administration
In a summary administration, a creditor meeting is only required if more than 25% of your creditors (by dollar value) request a meeting. It is to be held within 21 days of being requested. It’s worth noting that it is extremely rare that a creditor meeting is required in this type of administration.
Other Creditor Meeting Provisions
The Bankruptcy and Insolvency Act (BIA) also allows for your Licensed Insolvency Trustee to call a meeting of creditors at any time. Creditors can also request in writing for a meeting of creditors which must be held, as long as at least 25% of your creditors (by dollar value) have requested the meeting.
The BIA also allows for inspectors and the Court to request a meeting of creditors as well. It should be noted that it is exceptionally rare that inspectors would be appointed or a court would request a meeting of creditors in a simple consumer file.
This article was written by Angela Rodgers, CIRP, LIT. She is a Licensed Insolvency Trustee and the President of Powell Associates Ltd. She has worked in the insolvency industry for over 20 years. No matter if you are looking at filing bankruptcy, a consumer proposal, or simply looking for debt management advice, Angela can help.