September 5th, 2011 by Questions
It is my understanding that your monthly expenses are not concidered, only your income. . Thus I am feeling I am not able to make a proposal due to the fact I have to have a place to live and that is not taken into accoutnt. This was frome a cosumer debt councilor.
What do I do ?
Posted from: Ontario
One Response to “Monthly expenses”
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September 05, 2011 at 10:00 am, A licensed trustee said:
There are a couple of things at play – in determining how much you need to offer your creditors you’re expenses don’t come into account, BUT in dtermining whether or not a consumer proposal makes sense for you they definitely do.
The first step is to determine how much you need to offer your creditors. Currently you need to offer the greater of: (1) the amount your creditors will receive if you file bankruptcy; and (2) about 1/3 of what you owe. The cost of filing bankruptcy is based in part on your household size and income, your monthly expense don’t come into play.
In the second step you have to determine what you can afford to pay each month. If your living expenses only leave you $250 to pay towards a consumer proposal then there’s no point offering to pay $300 – it will simply fail and you may be worse off than before you filed.
Before you give up on the idea take the time to speak to a trustee. It may be the proposal can be “back end loaded” whereby your payments increase in future years to co-incide with planned reductions in expenses. (For example, you know your car loan is doen in 2 years).
Not everyone can manage a consumer proposal, and they don’t alwaysd make most the sense, BUT they should always be considered BEFORE you file for bankruptcy.