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letter of opinion

We couldn’t file our proposal b/c letter of opinion gave a high price on our house and was told that this will not be acceptable by creditors as they will ask us to do a re-financing. Is it true?

Posted from: Ontario

One Response to “letter of opinion”

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A licensed trustee said...

My answer is a bit long winded, so bear with me.

When you file a consumer proposal you need to offer your creditors the greater of:

(1) what they would receive if you filed for bankruptcy; and
(2) enough for them to agree – currently that means 1/3 of what you owe.

The amoutn of equity in your house will impact the answer to point (1) – what your creditors would receive if you filed for bankruptcy.

If you have more equity in your home than the total value of the debts that you owe then it might make more financial sense to remortgage your house. Of course, if you’ve had money problems then no one will want to give you a new mortgage. In cases like this you may still file a consumer proposal, but you end up repaying 100% of the debt. It looks a bit strange, but it has been done.

If you are not sure the trustee you spoke to considered this option then you may want to call another trustee for a second opinion.