The biggest benefit you will read over and over about a consumer proposal is that you get to ‘keep your assets‘. Just exactly what does this mean?
In the personal bankruptcy process, many assets are exempt from seizure, but some are not. Part of the purpose of filing a consumer proposal in some cases is to protect assets that otherwise might be at risk in a bankruptcy.
Some examples of items that are not at risk in a bankruptcy include personal items, household goods or a car with a total value of less than the allowable provincial exemption limits. Also, RRSP contributions from more than a year ago are protected.
Having said that, there are a number of important assets that may not be protected when filing a bankruptcy. Here are some examples. If you have equity in your home, bankruptcy may not protect it. If you have an RESP for your child’s education, bankruptcy will not protect it. If you own more than one car, or perhaps a motorcycle or a trailer, it is possible that bankruptcy will not protect that either.
In a consumer proposal, the idea is to make an offer to your creditors of payments over time. Part of the process to determine how much to offer in a proposal to your creditors is based on the value of those assets that are not protected in a bankruptcy. So, if you have $10,000 equity in a house, and don’t want to lose it, the starting point would be to offer a consumer proposal to your creditors, with payments of at least $10,000, perhaps at a rate of $200 per month for 50 months. It’s a bit more complex than that, but the idea is that by offering a proposal, you are giving yourself a much better chance at keeping what belongs to you.
Please contact a local consumer proposal administrator in your community to discuss all of your options. We offer a free, initial consultation and would be happy to help you learn if a consumer proposal is right for you.