Can I File a Joint Consumer Proposal?: Filing a Proposal on Joint Debt
Joint Consumer Proposals
The number of people filing for bankruptcy in Canada is declining because people are borrowing more sensibly and exploring their other options for debt relief.
Debt settlement programs and debt consolidation loans can be good options, and a lot of people are turning to consumer proposals as well.
The consumer proposal is a last resort option before bankruptcy, and it allows you to write off a large portion of the debt and only pay a small amount.
It’s a better option for you because you don’t have to give up any of your assets, and the creditor will get more money back than they would if you filed for bankruptcy.
Filing a consumer proposal is also very flexible because you can file as a single person or you can joint file a consumer proposal with another person.
This can be a partner or family member or even a business partner.
There are certain benefits to joint filing a consumer proposal but, in some situations, it is better to file separately.
If you are struggling with debt and you want to file a joint consumer proposal, it’s important that you do your research first so you know which option is best for your situation.
Who Can Joint File A Consumer Proposal?
The law doesn’t make it difficult for people to file jointly and it is quite common.
As long as you meet the consumer proposals standards of indebtedness, and the majority of debt is shared between you, you should be eligible to file a joint proposal with a business partner or family member.
You must owe at least $1000 in unsecured debt and you cannot owe more than $500,000 to qualify if you are joint filing.
There is no set law about the percentage of debt that needs to be held jointly, but most creditors will not accept the consumer proposal unless both parties share at least 90% of the debts.
The lack of strict guidelines gives creditors the freedom to work with you if you want to joint file a consumer proposal, and they are willing to do this in a lot of cases because it benefits them.
Pairs that may file together include a husband and wife, business partners, or a parent and a child.
If you are attempting to joint file with a business partner, it’s important to note that your creditors may refuse the proposal if you have a lot of personal debt as well.
Should You Joint File A Consumer Proposal?
When you are trying to decide between debt relief options, you always have to consider your own specific circumstances.
In some cases, filing a joint proposal is the best option but it may not be.
Many people prefer to joint file because it allows you to include more debt in the proposal.
The upper limit for a single person is $250,000, while the upper limit when joint filing is $500,000.
If you have significant debts that are not covered under a single proposal, joint filing can benefit you a lot.
You should also take the administration costs into account because they can be quite high.
The more money you spend on administrative costs, the less money you are able to put towards paying down the debt.
But when you joint file a consumer proposal, you are treated as one entity and so your administration costs are halved compared with filing separately, giving you more money to put towards debt repayments.
However, there is one big downside to filing together.
When you file a joint proposal, you are both liable for the repayments.
This means that if one person does not make their payment, the other person will have to cover all of it.
This is less of a problem if you are filing with a spouse and your finances are all shared, but it could be an issue when filing with a business partner.
What Is Your Best Option
Before you decide to joint file a consumer proposal, you should explore the other debt relief options because a consumer proposal has a negative impact on your credit score.
The question of whether you should file jointly or file on your own depends on your personal circumstances.
If you have a large amount of debt with your spouse, filing jointly can be a good option.
But you should be more cautious about filing with a business partner, especially if they already have debts.
Get in touch today if you want to learn more about debt relief options and how to joint file a consumer proposal.
You can reach us on the phone or fill out an evaluation form and we will get back to you.