If you are thinking about filing a consumer proposal you might have some questions about your bank account. We are often asked by our clients if they are allowed to have a bank account or do they close your bank account in a consumer proposal?
You are allowed to keep a bank account if you file a consumer proposal, but in most situations we urge you to open a new bank account before filing your proposal. There are several reasons for this.
Reasons to open a new bank account:
- Your creditors likely know your bank account information. Opening a new account will eliminate the chance that a creditor might try to withdraw money from your account.
- If you have overdraft protection on your account your bank will at the very least cancel the overdraft protection, but may also simply freeze your bank account.
- If your account is in overdraft and you continue to use the account you will have to pay back the overdraft in order to continue to use the account. If you open a new account then you can include the overdraft on your old account in your proposal which means you will not need to repay it.
So, while your bank may not automatically close your bank account in a consumer proposal, there are many risks associated with continuing to use your current account.
In order to reduce the possibility of complications we recommend that you open a new bank account at a bank where you do not have any debts.