Wondering about the pitfalls of consumer proposal

Thinking about doing one, mostly credit card debt around $80,000 between me and my wife, I haven’t even used my 2 cards in 2 years , I am just making minimum payments, I have 3 young children ages 8, 5and 3 and I my wife has a good job and I work away seasonally and still can’t get ahead with all the bills. But my concern is that we have reap plans for our children and don’t want to touch this, because it is for their future.
The credit cards are scotia bank, Td, and Cibc. I would be looking at no more than a 3 or four year payout.

Posted from: Newfoundland and Labrador

One Response to “Wondering about the pitfalls of consumer proposal”

A licensed trustee said...

First, when you file a consumer proposal you are offering your creditors a payment plan (usually for a portion of what you owe). Your children’s RESPs will not be cashed out or seized, BUT they may impact the amount you have to offer to repay.

The basic rules is that you need to offer your creditors the greater of:
1) what they may receive if you file for bankruptcy – in a bankruptcy your RESPs can be cashed out; and
2) enough to induce your creditoprs to agree to your offer – currently that means about 1/3 of what you owe

Use the linkson this site to contact a trustee in your area and ask them to explain all of this in greater detail.