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Consumer Proposals

Special Situations

Some special situations may change how you go about filing a consumer proposal, or if you even file at all.

Your ability to file a consumer proposal, and the terms of your proposal, depend largely on your personal circumstances. Some special situations should be considered when filing a proposal.

Separated and divorced individuals

Many people think that when the payment of debts was settled through a separation agreement or divorce order, that was that. Unfortunately, when considering the filing of a consumer proposal, a couple of things should be considered, regardless of what a judge may have ordered. Generally speaking…

  • If you have joint credit with, or have guaranteed a debt for, your ex-spouse and he or she files a proposal, the creditor will be permitted to demand payment of the debt from you. It will be a debt you are responsible for. If you do not make arrangements to pay the debt, it will be noted on your credit report. If you determine that the most appropriate solution to resolve your debt load is to file a consumer proposal, this debt may be included in the proposal.
  • Alternately, if you have joint credit with, or have guaranteed a debt for your ex-spouse, and you file a consumer proposal, you must declare this debt and include it in the proposal. Your obligation to pay the debt will be settled by completion of the consumer proposal. The creditor will be permitted to pursue your ex-partner for payment of the debt.
  • We will review with you, and a lawyer if appropriate, the terms of your separation agreement or divorce order to determine if the filing of a consumer proposal may have other implications that need to be considered.

Students and student loans

If student loans are owed, they must be disclosed to the Licensed Insolvency Trustee (“LIT”) and the creditors. If it has been over seven years since you last attended college or university, the student loan debt, just as all other unsecured debts, will be compromised by the consumer proposal and discharged once the proposal has been completed. If it has been less than seven years since you last attended college or university when you file your consumer proposal, the portion of the student loan balance not paid from the consumer proposal will survive the completion of the proposal and has to be paid. Interest will also accrue on this balance until it is paid. Students who have not been out of school for 7 years may choose to file a consumer proposal to extinguish other debts and to free up cash flow to pay their student loans. Past or current students should speak with an LIT if their student loan or other debts have gotten out of control in order to fully understand all available options.

Non-resident Canadians

If you have accumulated debt in Canada that you cannot pay, and you are a non-resident, you may file a consumer proposal or file for bankruptcy in Canada. We are currently assisting many individuals in the USA, England, South America and Australia. Meetings in Canada are not required. Telephone calls and emails suffice. The consumer proposal will only be binding on your Canadian creditors.

Self-employed individuals

If you are self-employed, filing a consumer proposal may be more complicated due to many things that must be considered:

  1. What type of business is it: corporation, partnership, sole proprietorship?
  2. Do you want to stay in business?
  3. Does the business have employees and is money owed to them?
  4. Is there a landlord that is a significant creditor?
  5. Are there CRA obligations for HST, source deductions or income tax?

Being self-employed can give rise to unique issues that should be carefully and thoughtfully considered. We are very experienced in assisting self-employed individuals regain control of their business and personal finances. As Licensed Insolvency Trustees, Proposal Administrators and Chartered Accountants, aligned with a major accounting firm, we possess the knowledge, skills, resources and experience to properly advise and assist you.

If you would like to explore if a consumer proposal is a viable solution for your financial problem or special situation, contact us today.

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