One of the biggest disadvantages to filing bankruptcy in Canada is that you may lose some of your assets. For example, in a bankruptcy you lose your tax refunds, GST credits, and equity you have built up in your home. Even worse, if your income increases while you are bankrupt, your payments may go up due to the surplus income rules.
So how can you protect your income and your assets, but still deal with your debts? File a consumer proposal.
In a proposal you don’t lose any of your assets. You don’t lose your tax refund, or your GST credits, or the equity in your home. So, if you are expecting a tax refund, or if you don’t want to lose your home, a consumer proposal may be the perfect solution for you. (Of course if you have a mortgage and want to keep your house, you are still required to pay your mortgage. In a bankruptcy, in addition to paying your mortgage, you may also be required to pay the equity in your home to the trustee).
Even better, if you expect your income to increase, so that in a bankruptcy your monthly payments to the trustee would increase, a consumer proposal is a great way to fix your monthly payment now. Here’s how:
You file a proposal today, based on your income today, and your ability to pay today. Once your creditors accept your proposal, your monthly proposal payment doesn’t change. Even if you get a raise at work, or work a lot of overtime, your payment doesn’t change. That’s why, if you are optimistic that your situation will improve in the future, you want to do everything possible to avoid bankruptcy.
So, if you have an asset or income to protect, contact a consumer proposal administrator today about filing a consumer proposal.