1. June, 2012 Consumer Proposals Presented by: Douglas Hoyes, BA, CA, CIRP, CBV

2. Consumer Proposal Legally Binding “Deal” 50% + 1 of dollar value of voting creditors required for approval

3. Why Should a Creditor Accept a Consumer Proposal? Greater realizations than bankruptcy Reasonable “cents on the dollar”

4. How to creditors vote? Most creditors accept all reasonable proposals Some creditors have unique internal rules, requiring a minimum: –Cents on the dollar –Time period –Expense levels

5. Why fixed rules don’t work: Trustees know what each creditor generally accepts, so –In many cases we will suggest bankruptcy, even where a viable proposal can be filed –This significantly reduces realizations for those creditors

6. How should creditors evaluate trustees? Responsiveness to questions Ability to produce documentation (ex. House appraisals) Dividend distribution policies Success rate

7. Hoyes Michalos Responsiveness to questions –60 staff Ability to produce documentation –All documents scanned; can be emailed Dividend distribution policies –Twice per month Success rate –92%/99%

8. Case Study

9. Case Study: Joe Debtor Debts: $50,000 Assets: –RRSP $25,000 ($5,000 in last year) Income –$2,980 per month (single, no dependants)

10. Case Study: Joe Debtor Liquidate assets: –Nets $13,000 from RRSP –Reduces debts to $37,000 –Pays $1,000 per month for 4 to 5 years to get out of debt

11. Case Study: Joe Debtor Debt Management Plan: –Pays $1,000 per month for 50 months

12. Case Study: Joe Debtor Bankruptcy: –Pays $500 per month for 21 months –Loses $5,000 of his RRSP –Loses $1,000 tax refund –COST: $16,500

13. Case Study: Joe Debtor Consumer Proposal: –Pays $300 per month for 60 months –Keeps all assets (RRSP, tax refund) –COST: $18,000 –Can pay off faster

14. Conclusion Know the warning signs Know the alternatives