Gift from relatives won`t happen
I recently took a year off work to pursue my education. I did so with the understanding that I would receive a gift from my relatives once they sold their home. However, their new home cost more than they expected, and they had to spend most of the proceeds from the sale of their property on renovations. I owe 70k, and I intended to pay back most of it with this gift. I normally would have made 20k take-home during the time I took off. With my income, I think I can qualify to pay back around 45k via a consumer proposal. I have no assets – I used all of my RRSPs to help pay for the time off.
What happens if my creditors don`t believe me about the gift? Would they reject my consumer proposal, or would they just amend it to ask for more money even though my income is too low to qualify for that monthly payment under normal conditions? (My spouse may be able to help with higher payments.) If someone has to pay back everything they owe for some reason, but doesn`t have the income to pay it back over 5 years, what happens?
While it is possible that the issue of this gift may come up when negotiating a proposal, but not likely.
The creditors are typically more concerned with your monthly cash flow, ability to make a payment, percentage of debt being repaid and what would happen in a bankruptcy. However anything is up for negotiation, so if they are concerned you may need to sweeten the pot so to speak.
In terms of what happens if you can’t afford what is being requested by the creditors, well often bankruptcy is the last available alternative. The best thing to do is discuss this with a local trustee to verify things, but rarely do you have to offer to pay the creditors in full during this type of a process.