In this column, you’ll learn how a joint consumer proposal works.
What is a joint consumer proposal filing?
A joint consumer proposal involves two people filing a consumer proposal together because they share the same debts.
To qualify, both parties should share equal responsibility for the majority of the debts in question. Both parties may also include some individual debts.
Paragraph 155 (f) of the Bankruptcy and Insolvency Act states:
in such circumstances as are specified in directives of the Superintendent, the estates of individuals who, because of their relationship, could reasonably be dealt with as one estate may be dealt with as one estate.
Here’s an example: a married couple or a common-law relationship may have taken out a co-signed bank loan, or they may have both of their names on a credit card. This means that the couple is jointly liable for the debt, and the lender has the right to request payment from either person if one person cannot pay.
In the above scenario, a joint consumer proposal may be a viable debt solution for both parties because one person’s debt is similar to the other.
Likewise, two family members could benefit from a joint consumer proposal if they share household debts. The same could apply to business partners if they borrowed money together for business expenses.
A Licensed Insolvency Trustee administers a consumer proposal. Your trustee will determine if a joint consumer proposal is appropriate for both parties’ circumstances and in the creditors’ best interests.
But to be clear, you don’t need to file a joint proposal to deal with your debts. Regardless of your circumstances, you can individually file without affecting your spouse or partner.
Who can file a joint consumer proposal?
To file a joint consumer proposal, each person must meet the individual eligibility requirements to file:
- The two individuals have combined unsecured debts of less than £500,000.
- You both live in Canada (a permanent resident or under a work permit or another status) or own property in Canada.
- Both individuals are unable to pay their bills as they become due.
- Each person can afford to make a monthly payment toward the debt.
See also: How to qualify for a consumer proposal
The advantages of a joint consumer proposal
- The debt limit increases from $250,000 to $500,000 (excluding a mortgage).
- Suitable for family members where household debt has been accumulated together.
- It can cost less, meaning more money is available to offer your creditors. This increases the chances of a successful consumer proposal while keeping your payments affordable.
The disadvantages of a joint consumer proposal
- You are both equally responsible for repayments: if one person stops making payments, the other person is legally responsible for those payments.
- If you miss three payments, your proposal is annulled.
- A consumer proposal affects your credit score and overall credit rating. It also appears on your credit report.
Can guarantor debts be included in a consumer proposal?
If you co-signed or guaranteed payment of another person’s debt, and both parties want to alleviate these debts, filing a proposal jointly can help you.
Filing a joint consumer proposal isn’t suitable for everyone
You must consider the financial relationship of the person involved, and you must trust the other person to meet their obligations to ensure it is successful.
A Licensed Insolvency Trustee can advise you on the best option for your circumstances and act in your best interests when determining if a joint filing is appropriate.
There are other options, such as filing an individual consumer proposal. You could also consider bankruptcy, credit counselling, debt consolidation, or a debt management plan.
The next step is to connect with a Licensed Insolvency Trustee for a free consultation.
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