Can I file a consumer proposal in Sarnia if my debts are low?

by Joel Sandwith on January 24, 2011

Most of the questions that we get are along the lines of ‘can I file if…’, for example, we get asked frequently if it is possible to file a personal bankruptcy on my own if my spouse didn’t cosign any of my debt – the answer to that one is yes.

A question that came up today from a client was ‘Can I file a consumer proposal, even though my debts are low?’  The answer to this is also yes.

The idea behind a consumer proposal is essentially to make a deal with your creditors – through a licenced trustee in bankruptcy, an amount of repayment is offered to your creditors, who then vote as to whether they will accept what you are offering.  The ideal situation is when the amount you can afford matches up with what the creditors are willing to accept.  In many cases, this can save you 50% or more on your debt, while you avoid personal bankruptcy.

Most of the time, consumer proposals deal with relatively large debts, for example in the range of $20,000 to $250,000.  But today, a client wanted to look into the proposal option for debts of about $10,000 in total.

When we meet with someone (first consultations are always free, by the way) we always look at all of their options.  In this case, non payment of debt might lead to garnishment, full repayment was impossible due to a tight budget, and they had attempted to consolidate the debt, but had been turned down.

A personal bankruptcy appeared to be a good option for this person, but they really want to try to repay part of the debt, and can afford a small payment each month.  So, we will set up a smaller proposal for them.  The benefit of this option to them is that they will keep any tax refunds they may get, they will not have to report income each month to us as the trustee and the payment is fixed each month but can be paid faster if they can afford it.  For the person in debt, these are big advantages over bankruptcy, and for the banks and other creditors, if they accept the small proposal, it will return some of the money that they are owed.  Really, a win win situation all around.

If you’d like to discuss your options, please call us toll free at 310-PLAN.

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