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Spending Habits Prior to Filing a Consumer Proposal


My home was foreclosed on in Oct. 2012 as a result of a marital separation and the mortgage insurance company is now taking steps to collect the $40K deficiency. I also have additional unsecured debt totaling $40K. Throughout the separation and prior to the foreclosure (4yrs) I have continued to make the minimum payments on these unsecured debts and they are current to this day. I also haven’t added more debt by making purchases on my credit cards during this time.

I knew once the foreclosure went through in October, the mortgage insurance company would come calling and now that they are, I will have to seek some debt protection.

My question is: Knowing that the mortgage insurance company would come calling once the foreclosure was complete, how will taking 3 vacations totaling $4500.00 since then effect a consumer proposal should I file one in May of this year? One of these trips is a destination wedding in April which was planned at least a year ago and will most likely be filing a proposal shortly after I return. Please note that these vacations were paid for using my savings and were not debt financed.

Thank you for answering my question.

Posted from: Alberta

One Response to “Spending Habits Prior to Filing a Consumer Proposal”

Barton Goth – Goth & Company Inc. -Trustee in Bankruptcy said...


Thank you for this quesiton as it introduces a good discussion about spending habits. First, it is important that you try to keep your spending habits reasonable if you are looking at filing a consumer proposal. But this is probably more important during the preparation phase of the proposal and through out the proposal as it will be necessary for you to be successful. However, your historic habits will be considered by your creditors when it comes to voting on the proposal. Now your case is unique, as you paid for the trips with savings as opposed to credit, your creditors may not even be aware that you had taken these trips. But even so, if they had a concern, it would be through the voting that their concern would be made known. Worst case scenario, it is possible to factor in these trips as part of the crafting of the propsoal so that even if the trips were an issue, the overall offer could be made in a manner that compensates the creditors for these choices. Again, I don’t see it as a major issue in your case, but it is definately something to discuss with your trustee and it can be addressed in the propsoal itself.