Consumer Proposal and Inheretance
I am thinking about filing a consumer proposal instead of bankruptcy since I can pay back part of my debt. I received an inheretence (7K) 6 months ago and spent most of it. Will I have to give that money back as part of my consumer proposal? I didn’t know at the time I spent it that I was in financial trouble. Thanks.
The answer depends on whether or not you were in financial trouble when you received the inheritance, what you did with the money, and how much you are offering to pay into your proposal.
Let’s start with the first point: if you weren’t in financial trouble when you received the inheritance then no one has the right to be critical of what you did with the money. Of course, if you are considering a consumer proposal now, it is reasonable to assume that you were in trouble six months ago when you received the inheritance (even if you didn’t realize it yourself at the time).
That’s where the second point comes in: how did you spend the money? If you spent it on rent or to catch up arrears on some of your bills you are probably ok. If you “blew it at the track” or took a “trip to Tahiti” your creditors (the people that you owe) might be justifiable annoyed and what you to pay it back.
That brings us to the final consideration: how much are you going to offer then in your proposal? At the very least, your proposal needs to offer a greater amount of money than your creditors would receive if you were to file bankruptcy. If once your trustee calculates how much you’d have to pay in a bankruptcy you add another $6,000 as repayment of the inheritance you should be okay.
When you pick the trustee that you are going to deal with (and there are links on the side of the page to help you find a trustee) make sure your review each of these points in sequence. That way, you’ll know exactly what needs to be done to deal with the inheritance issue.