What Is a Joint Consumer Proposal Filing?
It is possible, in fact quite common, for a consumer proposal to be filed by more than one person – this is called a joint consumer proposal filing. To qualify to file a consumer proposal jointly: all or substantially all of the debts for the individuals involved must be similar.
There is no legal definition of “all or substantially all similar”. In common practice, it has been interpreted as meaning 90% of the debts are the same, but this is not a strict rule.
Instead, common-sense rules the day. If it makes sense financially to allow persons to file jointly, then it is generally permitted. Unless someone objects to the joint filing, it will proceed.
Joint proposal examples
Some examples of when a joint filing might make sense include:
- Husband and wifeAll of the debts were accumulated by the family and the money to make the proposal payments is coming out of the family’s budget. So why not file a single procedure and thereby reduce the administrative costs (which means more of the money will be paid to the creditors).
- Parent and childAgain, if the parties are joint on the debt, it may make more sense to file a single proposal to deal with the problem.
- Business partnersThis is a little trickier, but still possible if the parties involved don’t have a lot of individual debt (i.e. they borrowed together for the business and don’t have a lot of personal debt).
Advantages and disadvantages of joint filing
The principal advantages of filing a consumer proposal jointly are:
- It increases the debt limit to $250,000 x the number of people involved.
- It reduces the costs to administer the proposal, so that more of the money paid will go towards repaying the debt.
The disadvantage of filing a consumer proposal jointly is this:
Each party is responsible for all of the payments. If two parties agree to split the payment and then one person stops paying, the other person must make up the difference or the proposal will eventually be annulled.
For example, if the payment terms call for a monthly payment of $500, then that is the amount that must be paid, regardless of any agreement or other relationship between the parties.