February 11th, 2011 by Questions

We are considering me and my wife filing for proposal. We have just refinance mortgage to include a LOC with the same bank as they did not want to pay other debts- we are left with 40k credit cards and loans from other institutions and no equity-will this be a problem when filing?
Second question: We have some RESP for kids- if we cash out and wait 6 months or so and then file and offer a lump sum in proposal – will this be a problem too.
Appreciate your help.

Posted from: Ontario


One Response to “RESP”

, A licensed trustee said:

Hmmm – you really should have spoken to some one about your plans before you started. It is likely that instead of just paying off the first bank with the equity in your home (by arranging the new line of credit) you could have used that equity as the basis for a consumer proposal to repay all of your unsecured debt. In addition, the proposal wouldn’t have any interest, while the line of credit certainly does.

The same goes for the RESP – instead of cashing it out, which hurts your kids future, you can simply ask the bank what it’s cash surrender value is (how much they will give you for collapsing the plan) and then that amount will be factored in to whatever proposal you end up offering your remaining creditors.

It’s too late for the house, but at least you should be able to save the RESPs. Use the links to contact a trustee in your area to discuss your optins BEFORE you make any mnore decisions.

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