Surplus Income, student loans and consumer proposal
I currently cannot meet my bill obligations and am a few months behind. I am considering filing a consumer proposal instead of bankruptcy as I make pretty good money in the winter but most likely will be laid off in the spring for a few months. Would I be able to `bank` an amount in the event I get laid off or would all the surplus income go to creditors? Is there a maximum I can make? Also would student loans and co-signed loans be included in a consumer proposal?
Posted from: British Columbia
The concept of surplus income only arises in a bankruptcy. In a proposal typically the payment, which is negotiated with the creditors, is fixed. There is no maximum you can make, however, you have to do the best you can at predicting what your income is going to be based on historicaly data. Then when you offer the proposal that information is used to prepare an estimate of how much you would be worth to the creditors in a bankruptcy and you would have to ensure the creditors would get paid more as a result of the proposal than in a bankruptcy.
In terms of student loans, the rule is that they will be cleared if you have been out of school for 7 years as of the day you offer the proposal. Co-signed loans can also be cleared, but the downside is that the co-signor is still fully responsible for the loan in question (your filing a bankruptcy or a proposal doesn’t realease someone else from the debt they have signed on).
From the sounds of it you need to sit down with a local trustee, have them review your current situation in detail and then they will be able to give you an idea what a consumer proposal would need to look like in your situation.