Will Filing A Consumer Proposal Prevent Me From Being a Director, Executor or Be Bonded?
In the realm of debt solutions, a consumer proposal stands out as an attractive alternative to bankruptcy. One of the many reasons is the freedom to retain positions of trust while effectively managing your financial obligations. In this article, we’ll delve into the question: Can I be a Director, Executor, or be Bonded if I file a Consumer Proposal?
The Issue with Bankruptcy
In most countries, including Canada, a person who has declared bankruptcy cannot serve as a director of a corporation. This rule applies even if the bankruptcy is personal and not related to the business. Consequently, if a person holding a directorship files for bankruptcy, they’re expected to relinquish their position. This can be particularly challenging if you’re the sole director of a personal business, as you would need to cede control to the trustee.
**NOTE:** The rule does not apply if you choose to file a consumer proposal instead.
What is a Consumer Proposal?
A consumer proposal is an alternative debt management strategy under the Bankruptcy & Insolvency Act. Unlike bankruptcy, when you file a consumer proposal, you’re not considered bankrupt. Therefore, you can retain your directorship and remain in control of your business.
Essentially, a consumer proposal is an arrangement to repay a percentage of your total debts. Since you’re not filing for bankruptcy, you retain control of your assets, including your business if it’s incorporated.
Advantages of Consumer Proposal
There are several benefits to filing a consumer proposal over bankruptcy. These advantages extend to various areas of trust:
Board Membership: Bankruptcy can affect your eligibility to serve on various boards, such as your condo board or the board of a charitable organization. If you file a consumer proposal, your board membership remains unaffected.
Executor of an Estate: If you file for bankruptcy, you won’t be able to serve as the executor of an estate. However, if you file a consumer proposal, you can continue or assume the executorship of an estate.
Bondability: An undischarged bankrupt is not bondable. On the other hand, a consumer proposal does not affect your bondability.
Professional Designation: Bankruptcy can potentially affect your professional designation. A consumer proposal provides a viable alternative in such cases.
To discuss the possibility of filing a consumer proposal, reach out to a licensed consumer proposal administrator. They can guide you on how to protect your assets, maintain your roles, and manage your debt.
Conclusion
A consumer proposal is a strategic alternative to bankruptcy. It allows you to retain your positions of trust, such as directorship of a corporation, executor of an estate, or membership on various boards. Plus, it doesn’t compromise on your bondability or risk your professional designation. If you’re contemplating debt solutions, consider seeking professional advice on whether a consumer proposal is right for you.
