This week, in our Guelph Office, I met with a young couple who own their own home, have a young child and are going through a very difficult financial period. The mother is on maternity leave with reduced income and the father has a landscaping business which due to the poor economy isn’t doing very well this year. To make ends meet they have been running up their debt – the resulting stress is having a serious impact on the family’s life…
An added complication for this couple is the fact that one of the spouses has been bankrupt once before.
In September 2009, significant changes we made to the Bankruptcy and Insolvency Act. For individuals filing bankruptcy for the first time, their bankruptcy will run for either 9 or 21 months (meaning they would be in the legal state of bankruptcy for that time period). Unfortunately, for persons filing bankruptcy for a second time their bankruptcy will run for 24 or 36 months. Further, when someone files bankruptcy for the second time it is far more likely that they will have to appear in Court to explain to a bankruptcy judge why they could not pay their bills for a second time; an unpleasant experience to say the least.
So what’s the solution to this young couple’s dilemma?
A consumer proposal; Simply put, a consumer proposal is an offer that you make to your creditors to pay back a portion of what you owe over a set period of time (no longer than 5 years). For example, if you owe $50,000 to credit cards, banks, lines of credit etc. a consumer proposal might be to repay $15,000 (a 30% repayment) which could be paid $250 per month for 60 months. When your proposal is delivered to your creditors, they have 45 days to vote. Every dollar they are owed counts as a vote and for the proposal to be accepted, 51% of the votes need to say yes. Viewed another way, a consumer proposal is a monthly payment plan that is administered by a licensed Trustee in Bankruptcy to deal with your debts. Filing a consumer proposal avoids the headaches, stress and legal consequences that someone would experience when filing a second bankruptcy.
If you think a consumer proposal might be the solution for you, take a free on-line evaluation and find out more. Alternatively, feel free to e-mail me or call directly at 310-PLAN and arrange a free consultation. There’s no harm in sitting down with one of our trustee’s who can explain all the different options available to you.
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