More and more Canadians are looking into alternatives for bankruptcy. In fact, in 2014 alone, more than 53,000 people filed for a consumer proposal. With a lower monthly debt payment, wage protection, and a considerably less severe effect on credit score, it is no wonder why using a consumer proposal has become a viable option for many. It is worth noting, however, that not everybody will be qualified for consumer proposals and other alternatives to bankruptcy may be more viable. There are certain requirements you need to meet and consider before looking at any debt restructuring option. An experienced consultant from 4 Pillars in Victoria, Nanaimo, Port Alberni, or Courtney can help understand your options and verify your eligibility.
Basic Eligibility Requirements
Some things to understand when considering a consumer proposal, firstly, you must be an individual (not a business) unable to pay off debts. You must also owe less than $250,000, excluding the mortgage on your principal home. Having sufficient income from a stable job to make payments under the proposal is also a prerequisite. Lastly, you must not have any outstanding or uncompleted filings under the Bankruptcy and Insolvency Act.
Special Circumstances
It would be best to understand all the requirements if you are intent on pursuing a consumer proposal. If you fall short of doing so, don’t fret just yet. You may still be eligible or other options may be better based on your situation, and a 4 Pillars consultant is an impartial consultant to help you determine if pursuing a consumer proposal is still the best course of action to take.
Already Declared Bankruptcy
In some cases, people who have already filed for bankruptcy might feel the need to file for a consumer proposal, too. This may be viable if your situation has changed and you are looking for a different payment arrangement. By filing a consumer proposal, changes can be made to payment arrangements so that monthly payments are lowered and the duration further extended. This needs very careful consideration and it may be better to simply complete the terms of the current bankruptcy.
Debt Exceeds Basic Requirement
Should your debt go past the $250,000 mark, you may still file a proposal – but it will not be the same as a consumer proposal and you may need to file a Division I Proposal. Your 4 Pillars consultant can further explain certain similarities and differences in procedures between Division I and a consumer proposal and review them against all the other options available including potential re-financing options.
Joint Consumer Proposal Filing
If you share assets and debts with a spouse through co-signing or a joint loan, you can likely file a jointconsumer proposal. All substantial debts must then be similar for both parties involved. Instead of the single limit of $250,000 for one person, the limit is increased to $500,000. There are many other factors to consider regarding consumer proposals. Before you start the process, make sure that you get professional advice.
Sources:
Consumer Proposal, Debt.ca
Are You Eligible To File A Consumer Proposal in Canada?, Consumer-Proposals.org
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