consumer proposal and losing assets
Question: In the case that I apply for a consumer proposal, do I risk losing any of my assets? For example I own a boat valued at 30,000.00 dollars. Could that be taken away from me even if it held as collateral on a personal loan. If so would it be wise to get that personal loan secured.
Answer: One of the main reasons for filing a consumer proposal is so that you don’t lose your assets. The concept behind a consumer proposal is simple: you offer your creditors more than they would get if you filed bankruptcy, but you make the payments over a longer period of time, so it’s affordable for you.
If you own a $30,000 boat with no loans against it, it is likely that you would lose it in a bankruptcy. Therefore, if you file a proposal, you will need to offer the creditors more than $30,000 so you can keep the boat.
If the boat is security for a loan, then the bank with the loan has first rights to the boat in a proposal or bankruptcy. In most cases if you continue making the payments to them they will allow you to keep the boat. Of course if you are in financial difficulty and are having trouble making payments, you will need to determine whether or not it makes sense to keep the boat: surrendering it may be the most prudent financial decision.
The rules in this area are somewhat complex, so we suggest you contact a licensed trustee for more information.