Consumer Proposal Help When Lump Sum Payments Received

We met with a lady the other day who just received a lump sum payment from her former employer as her severance package; her employer’s business was closing down and she had to be let go. She is a single mother with 2 young children and was counting on using the severance money to get by for the next while until she found a new job. Her current debt situation is fairly large; it was obvious that she could not continue paying her creditors; she thought that she had to file for bankruptcy. The issue we had to deal with was what would happen to this large sum of money in her bank account which she needed to pay rent and groceries with?

When you file for bankruptcy, the basic idea is that in exchange for walking away from your debts, you have to turn over your assets to your trustee, and then the trustee uses those assets to pay your creditors. There are certain assets you can keep, like your clothing and household items. What is not covered is this lump sum payment we are faced with here that the lady required to live off. Clearly, bankruptcy was not the right option in this case.

The answer we turned to was a consumer proposal. A consumer proposal is basically an offer made to the creditors as an alternative to bankruptcy. In our situation, the lady was able to keep her severance package while at the same time paying her creditors a monthly amount over a longer period of time (36 months in this case) which in total was greater than the amount of the severance package.

Consumer proposals are a very flexible debt management tool.

If you are struggling with debts but have an unusual income situation, contact us today and let us help you structure a deal that works for you as well as your creditors.

Similar Posts:

  1. Consumer Proposal or Bankruptcy: Decision Factors
  2. Can You Switch Between Bankruptcy and Consumer Proposal?
  3. I’ve Filed Bankruptcy & Collection Agents Are Still Calling
  4. Why a Consumer Proposal May Be Your Best Option
  5. Calculating Payments in a Consumer Proposal

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