Can I lose my home in a consumer proposal? This is a question that many individuals find themselves asking when they’re on the verge of filing a consumer proposal. It’s a valid concern, as your home is a significant asset and more importantly, it’s where your heart resides.
Understanding Consumer Proposal
A consumer proposal is a federally regulated debt relief solution that allows you to consolidate your debts or settle them for a lesser amount, sans any interest charges. It’s an alternative to bankruptcy that’s often favored for its flexible and lenient terms.
Your Home and Consumer Proposal: The Connection
The fear of losing one’s home is a common concern among those considering a consumer proposal. Yet, it’s important to understand that filing a consumer proposal does not automatically result in losing your home. Section 84.2(1) of the Bankruptcy and Insolvency Act safeguards your assets from being repossessed solely due to a consumer proposal filing.
Safeguarding Your Home: The Legal Framework
The legal framework provides protection to your home in a consumer proposal proceeding. For instance, if you default on your mortgage payments, the bank may foreclose on your home. Yet, if there’s equity in your home (the home’s value exceeds the mortgage debt), you’re required to pay that equity to your Trustee for the benefit of your unsecured creditors. This equity is factored into the consumer proposal terms.
The Role of Equity
Equity plays a crucial role in a consumer proposal. Some provinces provide protection for a portion of the equity in your principal residence. However, if you reside in New Brunswick, Nova Scotia, or Prince Edward Island, there’s no protection for the equity in your home.
Addressing Judgement Liens
If there are any judgments secured against your house, most can be discharged or removed through a consumer proposal. This not only ensures you don’t lose your home but could also put you in a better position in terms of financial stability.
The Role of A Licensed Insolvency Trustee
A Licensed Insolvency Trustee, previously known as a Trustee in Bankruptcy, is a professional who can guide you through the process of a consumer proposal. They can review your options and determine if a consumer proposal is the right choice for you or if an alternative solution is more suitable.
Consumer Proposal: The Benefits
A consumer proposal comes with numerous benefits. Here are the top 10 advantages:
- You can write-off part of your debts.
- It stops collection calls.
- It can stop a wage garnishment.
- It can unfreeze your bank account.
- It is legally binding on all unsecured creditors.
- It deals with CRA and payday loan companies.
- You get to keep your assets, including your tax refund.
- It can reduce your monthly payment to an affordable amount.
- No interest is charged on monthly payments.
- It helps you avoid bankruptcy.
Debt Consolidation or Consumer Proposal: Making the Choice
If you’re grappling with significant credit card debt, tax debts, or other unsecured debts, you may wonder whether a debt consolidation loan, home equity loan, or second mortgage is a viable option. A debt professional can help you review your debt restructuring options and compare the pros and cons of each choice.
Understanding Personal Bankruptcy
Personal bankruptcy is often seen as a last resort. Yet, sometimes it is the most suitable option to eliminate your debt. Your Licensed Insolvency Trustee can help you decide if filing for bankruptcy is the best choice for you.
Getting Help from A Licensed Insolvency Trustee
Struggling with debt is hard, but you don’t have to face it alone. A Licensed Insolvency Trustee can help you explore all your options and choose the solution that fits your situation best. They can help you break free from credit card debt, stop the payday loan cycle, get tax debt relief, and even gain student loan debt forgiveness.
Remember, you’re not alone in your journey to financial freedom. Reach out to a Licensed Insolvency Trustee today and take the first step toward a debt-free life.
