What assets can you keep in a Consumer Proposal?

One of the biggest concerns people have when they come to see us is that they are going to lose all their assets if they file a Consumer Proposal. This is especially true of vehicles, homes, and RESPs. 

Most people rely on their vehicle to get to work, run errands, or drive kids and parents to activities and appointments. Others may own a home but still struggle with unsecured debts like credit cards or lines of credit. In many cases, selling the home or moving wouldn’t actually lower their monthly expenses. And when it comes to RESPs, families are often hesitant to give them up after years of saving for their child’s post-secondary education.

These are all good examples of assets people want – and need – to keep when dealing with debt.

The good news is that a Consumer Proposal is very different from Bankruptcy. Unlike in a Bankruptcy, when you file a Consumer Proposal, ownership of your assets is not transferred to the Licensed Insolvency Trustee.

When you meet with a Licensed Insolvency Trustee (LIT), they’ll take the time to understand what led to your financial challenges. They’ll review your assets, income, monthly living expenses, and liabilities to determine which debt-relief options make the most sense for you. Whether that’s a Consumer Proposal, a Bankruptcy, or another solution, your LIT’s goal is to answer your questions and determine the best path forward for you.

As part of the process, your LIT will assess the realizable value of your assets. This involves determining:

• Whether an asset is exempt or non-exempt
• Its current value
• Any loans or security registered against it

If any asset has a realizable value, that value may be factored into the amount you offer creditors in a Consumer Proposal, but ownership of the asset remains with you.

Your income and monthly expenses will also be reviewed to ensure the proposal payment is affordable. A Consumer Proposal must offer creditors more than they would receive in a Bankruptcy, while still realistic within your budget.

If you’re struggling with your debts, and aren’t sure where to turn, a LIT is the only professional licensed by the Government of Canada to explain your options. Getting the right advice can help you protect what matters while finding a clear path forward.