Possibility of filing a consumer proposal
May 27th, 2015 by Questions
I am currently using my investment savings to pay all our monthly expenses. I am looking for a job, my husband is self-employed and has not earned income for several months however this money is dwindling and I am looking to the possibility of filing a consumer proposal. What will be the requirement be with the money I am using to live off of? If I use it as a lump sum payment, I will have nothing left to meet mortgage payments, etc.
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May 27, 2015 at 8:39 am, Doug Stuive, CA | Trustee | CIRP said:
When considering a consumer proposal there are two things that are generally considered- the ability of the consumer to fund a consumer proposal and the anticipated dividend the creditors will get if they accept that consumer proposal. In order to determine if a person has the ability to fund a consumer proposal your advisor will look at how you are meeting your monthly expenses and whether there are any funds available to put towards your debt payments. In your case you do not have the income to support your living expenses and you are already using your savings to live. While it is possible to fund a consumer proposal with investment or savings this may or may not be a good idea. You have already pointed out one issue- if you contribute all your investment funds you will not be able to pay for basic living expenses. The other issue is that you may not have enough money in your investments to pay out the creditors a reasonable dividend.
Often times your advisor will look at what a bankruptcy scenario would be for your circumstances. In bankruptcy some investments are taken by the trustee for the general benefit of your creditors and some assets are protecting and cannot be touched. Depending on how your investments and savings are structured you may not lose these investments in a bankruptcy scenario. While bankruptcy is considered a last resort in some cases it does make the most sense in the long term.
I would highly recommend a free consultation with a trusted advisor to go over your options in more detail.