Debts Included in a Consumer Proposal
Both consumer proposals and bankruptcy filings have very specific rules about what debts can be included. With consumer proposals, not every debt can be included to resolve your money problem. Only unsecured debts can be included in your consumer proposal. These ‘unsecured debts’ are the debt obligations that do not have security provided to the creditor. Some examples of unsecured debts are:
- Credit cards
- Lines of credit
- Personal loans
- Payday loans
- Income taxes
With ‘secured debts’, the debtor (you) provided a guarantee to the lending creditor with an asset. If the debtor is unable to make payments on a secured debt, then the creditor has the legal right to take possession of the agreed asset and can resell it to recover their loan. A commonly recognized example of such action is the repossession of a care by the financial institution that provided the car loan. Some examples of secured debts are:
- Car loans – secured by the car
- Mortgages – secured by the house
Secured creditors must be notified if a consumer proposal is used, but they do not receive any money from the actual proposal. The individual filing a consumer proposal can choose to either continue paying their secured debt obligations (in which case they get to keep the asset), or they can stop paying with the understanding that the secured creditor will seized the asset which was guaranteed against the debt.
This is where your BDO specialist can help. Contact us for a FREE consultation to let us explain all of your debt management options, and review your secured and unsecured debts, to help you decide if a consumer proposal is the correct choice for you.
We have many offices to make your consultation convenient and stress-free. In central Ontario, we have offices in Newmarket, Barrie, Bracebridge, Cobourg, Newmarket, Keswick, Lindsay, Midland, Newmarket, North Bay, Orillia, Parry Sound, Peterborough, Sudbury and Uxbridge (click here for FREE consultations in those locations).
For locations throughout the rest of the Ontario and Canada, Click Here for a list of office locations.