What happens to my house, car and other possessions if I file a consumer proposal in Sarnia?

by Joel Sandwith on October 1, 2010

This may be the most common question we get each day.  In most cases, the answer will be very simply that you get to keep it.

Here’s how it works.  First, if you have a house, or a car, that you owe money on, as long as the value of the property is not a great deal higher than the amount owing, you may keep it.  One of the considerations with this is simply, ‘can you afford it?’  If the payment is within your budget, and you are not behind on those payments, then everything will be fine.

If part of the problem is that your mortgage payment or car payment is far higher than you can afford, or if you are behind on the payment, then you may choose to give that asset up, and include any shortfall in the consumer proposal.  If this is what you are dealing with right now, we’d suggest you call us right away at 310-PLAN (7526) to get some advice about how to proceed.

What if the mortgage on your house is less than its value?  If there is equity in the house, then we need to make sure that the consumer proposal you offer is worth more than the equity – you want to provide an incentive for your creditors to accept your proposal.

What if you own your car with no payments?  In that case, the value of the car comes into play.  If the car is worth less than $5650 (at wholesale value) then it is not an issue at all.  If it is worth more than that, you can still keep the car, but you might have to offer a little more in your proposal.

What about personal belongings, furniture, etc?  The same exemptions exist for these items in Ontario for a consumer proposal as for a bankruptcy.  Again, if your belongings are worth less than the exemption amounts they are not an issue.  If they are worth more than those exemptions, again, you may have to pay a little more to your consumer proposal.

The key thing with a consumer proposal is that it is a ‘compromise’ – basically a deal, made between you and your creditors.  They agree to give up some of the debt they were owed, and you agree to pay them more than they could get in a bankruptcy.  In many cases, this can be the perfect balance, helping you out of debt more quickly than paying on your own, while not filing a bankruptcy.

If you have any questions about this, or about other assets and how they are treated, call us toll free at 310-PLAN (7526) – no area code required, or locally at 519-344-1058.  We’d be happy to help you build a plan to deal with your debts.

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