Understanding Consumer Proposals: Can You Keep Your Car?
Consumer proposals are a popular debt solution for many individuals. They offer an attractive alternative to bankruptcy with several benefits. One of the most common questions asked is, “Can you keep your car in a consumer proposal?” This article will delve into this topic and provide an in-depth understanding of consumer proposals and how they affect asset ownership, particularly car ownership.
A Breakdown of Consumer Proposals
Consumer proposals are legal agreements between individuals facing debt and their creditors. These proposals are managed by Licensed Insolvency Trustees. The person in debt collaborates with a trustee to craft a proposal where creditors receive payment over a five-year span. Consumer proposals are an attractive alternative to bankruptcy and offer several benefits.
Asset Protection in Consumer Proposals
One of the key features of consumer proposals is the protection of assets. If you have filed a consumer proposal with the help of a Licensed Insolvency Trustee, your possessions, including your car, are safeguarded from creditors, irrespective of their value.
Car Payments in a Consumer Proposal
Under a consumer proposal, individuals can retain their leased or financed cars. The reason behind this is that financial institutions and banks are more concerned with the monthly payments than the vehicle itself. If you have no outstanding payments on your car, you are merely required to declare the value of your vehicle in your assets list. In Ontario, for instance, cars are exempt up to a value of $7,117.
Leasing or Financing a Car Under a Consumer Proposal
Even after filing for a consumer proposal, it is still possible to lease a car or secure a car loan. However, you must inform your trustee about your plans so they can reassure the finance companies of your payment responsibility. If you decide to lease a vehicle, your trustee must be informed about the lease terms and monthly payments.
In the event you wish to cancel any existing lease or finance agreements at the time of filing the proposal, you must do this as part of your proposal. Any outstanding amount after the sale of the vehicle by the secured creditor will be classified as unsecured debt.
Continuing to make car payments can sometimes be easier when you file for a consumer proposal to clear your debt. Consumer proposals offer creditors monthly debt payments through settlements, not by surrendering assets. This is one reason why filing for a consumer proposal is more appealing than declaring bankruptcy.
Additional Benefits of Consumer Proposals
Another advantage of filing for a consumer proposal is that it has a less detrimental impact on your credit report compared to bankruptcy. It also enables you to recover from overwhelming debt much faster. With consumer proposals, you get legal protection from creditors, thanks to your Licensed Insolvency Trustee. You can also clear your debt quicker, without having to worry about interest fees.
How Do Consumer Proposals Work?
Under consumer proposals, your debt is consolidated into a single settlement to be paid over a period of up to five years. A Licensed Insolvency Trustee will assess your situation and options before filing a consumer proposal on your behalf.
When To Consider a Consumer Proposal
Filing for a consumer proposal can be beneficial for anyone struggling with paying off extensive debt or dealing with a damaged credit score. When someone has a significant amount of debt, creditors may incessantly call demanding payment or even request to seize the debtor’s paycheques. This can lead to other payments getting delayed, causing individuals to struggle with meeting their financial obligations.
In such situations, filing for a consumer proposal offers the convenience and practicality of consolidating many different payments into one.
Seek Professional Help: Bankruptcy Canada
At Bankruptcy Canada, we prioritize you and your business. We are licensed insolvency and bankruptcy trustees committed to helping you on your journey towards becoming debt-free. We have assisted thousands of residents across Canada in getting out of debt. If you need help, don’t hesitate to call us. We are here for you.
Conclusion
Understanding the implications of a consumer proposal on your assets, particularly your car, is crucial when considering this method of debt relief. The good news is that you can indeed keep your car in a consumer proposal. However, it’s also vital to understand the entire process and its implications on your overall financial health. Always seek assistance from professionals to make an informed decision.
Additional Information: Will I Lose My Car in a Consumer Proposal?
The short answer is, no, you will not lose your car in a consumer proposal. As mentioned earlier, one of the key benefits of a consumer proposal is the protection of your assets, and this includes your car. However, this depends on several factors including the value of your car and whether or not it is fully paid for.
If you’re still unsure or have more questions, it’s best to consult with a Licensed Insolvency Trustee. They can provide you with advice tailored to your specific situation.
Remember, the primary goal of a consumer proposal is to help you manage your debts more effectively. Therefore, you should not have to worry about losing your assets, including your car.