I’d like to tell you the story of Jack who came to meet with us in our Cambridge office to discuss his debt options. He had many questions and concerns about his options. The only thing that he was sure of was that he did not want to file for a bankruptcy.
He had recently separated from his spouse; during the separation they lost their matrimonial home, leaving them with a shortfall of around $70,000. His ex had to file a consumer proposal herself for her portion of the debt. This left jack on the hook for the $70,000 from the shortfall of the home. Many people misunderstand the concept of a joint debt, or co-signed debts. Many people believe that if one person defaults on the debt that the other is only responsible for half of the debt that was incurred. This is not true, and I explained to Jack that he is not responsible for half of the debt, but the full amount. He was concerned that the bank was going to start wage garnishment proceedings on him, so he wanted to move quickly.
After discussing his situation, it was determined that Jack is a family of 2 (one of his children lives with him) he makes $3500 per month and does not pay support to his ex. He owns two vehicles, one is financed and the other is owned outright. He also has a company pension plan that is locked in until he is 65.
We discussed his options the major road block for Jack is that in a bankruptcy he would have major surplus. This was fine with him, as he wanted to avoid filing a bankruptcy at all costs anyway. We looked at possible proposal terms and it turned out that a Consumer Proposal was actually going to result in a smaller payment per month than a bankruptcy. He liked the idea that in a proposal he will know what his monthly payments are every month- it never changes. Jack felt that this would help him with his budgeting and making sure that he makes his payments on time and every time.
In the end Jack was getting what he wanted, he wanted to pay his creditors back but could not afford to pay them in full, he wanted to avoid filing for a bankruptcy, and also wanted a manageable payment each month. A consumer proposal helped Jack achieve all of these things.