Consumer proposal lump-sum payout
I’m considering a consumer proposal. I owe about $65k on credit cards and lines of credit. I don’t have a steady job currently, although I expect to have one in the next few months.
Will my creditors refuse my proposal if my income isn’t stable, or my job is new? If so, could a family member give me some or all of the amount owing to be paid in a lump sum to my creditors? Would my creditors have more confidence if I used a portion or all of my own RRSP ($8k) to make a lump-sum payment as evidence of good faith, and then pay off the rest over time?
When the creditors are looking at whether to support a proposal or not, stability of income is often a consideration. This doesn’t mean that this will be sole grounds for rejecting a proposal, but will likely be an area of concern for the creditors so you will have to be prepared to explain why you don’t think this will cause any problems with you keeping up with the proposal commitments.
As for a lump sum, this is always a possibility, and a possibility that often the creditors would prefer and as a result may even be willing to accept a slightly lower repayment rate in exchage for receiving the money quicker.
In terms of the RRSP’s, using the RRSP’s is a good idea as typically the creditors do not like the idea of allowing a sigificant asset such as this go untouched. This doesn’t mean that it is required, but usually to keep an RRSP you have to offer a fairly sigificant recovery to the creditors.