Can I Keep My Assets with a Consumer Proposal

A consumer proposal is a legal agreement between you and your creditors, prepared by a trustee, which restructures the way you pay unsecured debt.  Unlike a bankruptcy filing, where your debt is forgiven in exchange for the surrender of assets, with a consumer proposal you will still be paying creditors, only at a reduced amount. A key advantage of a consumer proposal over bankruptcy is – you get to keep your unsecured assets.

When you file for bankruptcy, you are required to provide your trustee with a list of assets, both physical and monetary.  Certain assets are considered exempt from seizure in a bankruptcy filing. Non-exempt assets are liquidated and the proceeds are used to pay creditors. When you file a consumer proposal, you can keep all of your unsecured assets.

You can also choose to give some secured assets up. Perhaps you cannot afford to keep your car or house due to the large payments. One option is to let those assets go, along with their payments. Another option is to negotiate a lower payment with the creditor. The interest rate or length of the contract can be adjusted if both you and the creditor agree to do such.

When you file a proposal, the payment amount stays the same throughout the duration of your agreement.  When you file for bankruptcy your income must be reported monthly to the trustee.  Depending on how much income you receive in a given month, you may have to make additional payments to the trustee.

If you have a stable source of income and significant assets that you’d like to protect, a consumer proposal might be the best solution to your debt problems.  You can meet with a licensed trustee for a free consultation. If a consumer proposal is the best option for your situation, the trustee will draft the proposal and submit it to your creditors for approval.  When approved by a majority of your creditors, the proposal becomes binding. All collection attempts against you stop. You can begin making payments knowing that your assets are protected.