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What amount would satisfy my creditors?

I own 2 houses, my wife and I lived in both homes. One home is in Alberta and the other is in BC.  My wife is not on title with either home. We are currently in the Alberta home. The home in BC has been vacant for over 6 months ( no tenants). My wife is suggesting we sell the Alberta home and pay off our credit cards, we have approx $40,000 equity in this home (if we don’t use real Estate). Being in Alberta with Dower rights my wife has 50% equity in the home so that would leave approx $20,000. for me to pay off $40,000 worth of credit card debt. AND The short fall on the BC home will be appox ($125,000.) according to our Realtor. Here is the main question can the BC home be included in the consumer proposal, it is back by CMHC. My wife is not on title.

The bank suggested 6 months ago that I sign a some sort of agreement that states I would be liable for all the short fall, if I gave the home back to them. Also would the $20,000 be enough to satisfy the all the creditors including the Bank with the mortgage, as a lump sum payment to all of them? I’m just turned 65 and cannot see paying monthly payments until I’m 95 or older. Also I desperately need a new vehicle, would this financing have to be included in the proposal?

Posted from: Alberta

One Response to “What amount would satisfy my creditors?”

Jillian Taylor-Mancusi, Trustee | B.A. | C.I.R.P said...

Generally, if you were to walk away from the house in BC, the shortfall could possibly be included in a statutory remedy such as a bankruptcy or a consumer proposal. When you file a consumer proposal you are proposing a debt settlement to your creditors. It is up to the creditors’ to vote either in favor or against the offer you have proposed to them. The voting period in a consumer proposal is 45 days. A consumer proposal generally has to offer more to the creditors than in a bankruptcy. If your spouse is not liable for the debt, the creditors cannot pursue her for the debt or shortfall. The specifics of how much to offer under the consumer proposal are best to be discussed with a local trustee. Your local trustee will be familiar with the provincial exemptions with regard to houses in Alberta, as well as the dower rights that may be available to your spouse as both dower rights and exemptions vary between the Provinces. Should you obtain new vehicle financing prior to the filing of a consumer proposal, this fact would be reported on your Statement of Affairs. It may be possible to continue the payments in order to keep the vehicle. Again, the specifics of this situation should be discussed when you meet with the trustee.