Consumer proposal and income
Question: I am considering making a consumer proposal, because the amount of debt that I have is just unmanageable. My home is worth about $350,000, with maybe $20,000 in equity. I have about $35,000 in credit card debt, and a $100,000 unsecured line of credit. I have three children and a non-earning spouse, and I earn $130,000 per year. I am making minimum payments on credit cards and the line of credit (which is interest-only) and I am always hugging the line every month. It’s very stressful, and I’m not getting ahead. Would a consumer proposal work for me?
Answer: Yes, a consumer proposal is a viable option for you. The key will be to determine what you can afford to pay each month, and that will be the basis of your proposal.
Your creditors will know that if they don’t accept your proposal and you file bankruptcy, they will be entitled to the equity in your home (say $20,000), and a portion of your surplus income, so your proposal will need to be for more than they would receive in a bankruptcy.
We suggest you make a detailed budget to determine what you can afford to pay each month, and then contact a consumer proposal administrator to help you determine what monthly payment is likely to be accepted by the creditors.