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Allowable expense calculations and Debt Repayment or Consumer Proposals

Just wondering … what type of monthly expenses are allowed to be incurred when entering into a debt repayment or consumer proposal program. Am sure that things such as.. rent/heat/hydro/food/insurance/car payments, gas, and maintenance/personal care … would be allowed … but what about cell phone/cable/internet/medical expenses/clothing? Is there any where that I can find out the amounts allowed? Is it different in debt repayment than with consumer proposals?
Thanks for your help.

One Response to “Allowable expense calculations and Debt Repayment or Consumer Proposals”

A licensed trustee said...

I think you may have misunderstood something that you have read on about your monthly expenses.

The law has not establishd any set amounts for your monthly expenses – you may spend your income as you see fit. What bankruptcy law has said is that they think a person or a family requires “X” amount of dollars to maintain a reasonable standard of living. If you eanr in excess of that amount then you are subject to the Surplus Income Rules.

So, when you prepare your monthly budget to sow your creditors as part of a Debt Management Plan, a Consumer Proposal or Bankruptcy, no one hasthe right to tell you that you are spending too much on “rent”, or “food” or even “red licorice”. You may spend your money as you see fit.

They do have the right to say, “based on your budget, you should be able to pay a certain amoutn towards your debts”. The trick is to determine a payment that your creditors will accept that you can live with.

This is the difficult part of filing a proposal and why you should ask your trustee how many proposals they file, how many are accepted by the creditors, and how many of their clients are able to complete their proposals.

Here are some national numbers to compare the trustee you are speaking to with:

Ratio of proposals to bankruptcies nationally: roughly 1 to 6

Ratio of proposals that are accepted: 90%+

Percentage of proposals completed by individuals: 71%

At the risk of turning this answer into an ad for our firm, our stats are as follows:

Ratio of proposals to bankruptcies: 1 to 2

Percentage accepted by creditors:

Percentage completed: 79%

Last year we filed over 600 proposals – we believe people should consider a proposal before they decide to file bankruptcy.

Sorry – I hope I answered your question before I got carried away on my tangent.