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Consumer Proposal and Property

Hello, prior to submitting a consumer proposal, if we sell our house to my brother and rent from him, but use the equity to keep our heads above water (pay our bills, pay our rent for our business as we are self employed), how does this affect the consumer proposal? are we still eligible?

Can my brother then sell the property? any restrictions on his equity?

Posted from: Ontario

One Response to “Consumer Proposal and Property”

A licensed trustee said...

It’s a question of how much you sell the house for, how much equity you take out, and then how much time passes before you file the proposal.

If you sell your house to your brother for less than it’s full fair value then there will be trouble.

If you get a large amount of equity out and you spend it in a very short period of time there will be trouble.

If you file the proposal the day after you sell your house to your brother there may be trouble.

A better plan may be to determine how much equity there is in your home and offer your creditors at least that much in your proposal. Then you can sell your house your self and use the money to pay off the proposal – you don’t need to involve your brother at all.

Before you do anything you should speak to a trustee. They will explain all of the different ways your original plan may get you into trouble…