One of the biggest advantages of a consumer proposal is the fact that your assets are protected. This can be particularly important if you have equity in your home, own a car or would like to preserve savings like your children’s RESP. Following is some information on how filing a consumer proposal affects these different assets.
How a Consumer Proposal affects your house & mortgage
When you file a consumer proposal you can keep your home as long as you continue to make monthly mortgage payments.
A mortgage lender cannot foreclose on your home unless you are behind on your payments. They also cannot change the terms of your mortgage just because you filed a consumer proposal.
It is usually possible to renew a mortgage during a consumer proposal with your existing lender as long as you have a good payment history with them (all mortgage payments are current). During the consumer proposal process, it can be much more difficult to switch mortgage lenders so this may affect the interest rate on a potential refinance.
A Consumer Proposal and car loans and leases
The same treatment is applied to other secured assets like a vehicle. As long as your loan payments are up to date and you continue to make your car loan or lease payments, you can continue to keep your vehicle.
If you have an expensive car lease and do not want to continue with that lease, you also have the option to cancel the lease as part of your proposal. Any amount owing as a result of the cancellation will be included as an unsecured debt in the proposal.
Consumer Proposals and RRSP’s, RESP’s and investments
Under bankruptcy law, an RRSP is not seizable by a trustee in bankruptcy except for contributions made in the last year. In a consumer proposal, even those contributions are yours to keep.
RESP’s and other investments are assets that you would have to hand over to a bankruptcy trustee. By filing a consumer proposal you can keep these assets.
This Looks to Easy: I keep my assets with no cost?
Your creditors will generally accept your consumer proposal if you offer more than they would receive in a bankruptcy. Your Hoyes Michalos Consumer Proposal Administrator will calculate any equity (or value) you have in your house, car or investments, and will ensure that the proposal you offer will be greater than the value of those assets.
For example, if you have $10,000 in equity in your house and that’s your only asset, a viable proposal might be $200 per month for 60 months, or $12,000. With that proposal the creditors are happy because they received more than the $10,000 they would have received if you had declared bankruptcy and the trustee sold your house, but you are happy because you get to keep your house and only pay $200 per month in your proposal.
Ask us how to Avoid Bankruptcy
As you can see a consumer proposal provides an alternative to bankruptcy that allows you to eliminate your debts while protecting assets you have acquired or saved over time. Calculating the equity value in any asset can be confusing.
We would be happy to discuss your situation and help you determine how a consumer proposal will affect your house, car or other property.
Contact us today for a free, confidential consultation. Since 1999 we have helped more than 17,000 individuals and couples file a consumer proposal and keep their home or other assets while finding a way out of debt. We can help you do the same.