self employed consumer proposal
January 13th, 2011 by Questions
I\’m self employed and considering a Consumer proposal to deal with my debt (approx $90,000). My understanding is that a time line will be established to pay the agreed percentage back to creditors. Can I continue to be self employed (vs. an employee of a company) and if my business situation improves can I pay the proposal balance off early and subsequently shorten the time that it stays on my credit rating? Does the agreed consumer proposal value stay the same or would improved earnings be garnished by the trustee to pay back creditors and still require paying out the full term?
Posted from: Ontario
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January 14, 2011 at 2:55 pm, Barton Goth - Goth & Company Inc. -Trustee in Bankruptcy said:
Firstly, there is no problem with you filing a consumer proposal and being self employed. As long as you can demonstrate fairly consistent income despite being self employed then really it shouldn’t be a problem.
As for a change in income. This partly depends on how the proposal has been worded, but under most circumstances in a consumer proposal if there is a fluctuation in your income there is no fluctuation in your payment. This can clearly be a double edged sword as if you income goes up your payment is fixed and it benefits you, but if your income decreases the payment is still fixed and it becomes more difficult for you.
As part of this if your income increases and you are able to pay in advance to the schedule proposed, there is no problem with this nor is there any associated penalty or early buy-out cost like you might find in some loan agreements.