How Divorces, Student Loans, and Expatriates Affect Consumer Proposals
There are certain situations that can affect how, or if, you should file a consumer proposal. Separations, divorces, student loans, living abroad, or self-employment can all affect your consumer proposal. The good news is we’re here to help you get the results you need, and our experienced professionals are always available to walk you through the consumer proposal process. We’ll provide recommendations and advice to help you get back on your feet and offer alternatives as needed to ensure the best outcome for your individual situation.
Divorces and Separations
During a separation agreement or divorce order, the payment of debts is often settled according to agreed-upon terms.
But with a consumer proposal, there are other aspects to consider:
- If you have joint credit with or have guaranteed a debt for your ex-spouse and they file a proposal, the creditor will be permitted to demand payment of the debt from you. You are responsible for this debt, and if you don’t arrange to pay it, it will be noted on your credit report. Should you determine that the most appropriate solution to resolve your debt load is to file a consumer proposal, this debt may be included in the proposal.
- Should you be the one filing a consumer proposal, you must declare any debts or joint credits shared with your ex-spouse and include it in the proposal. Your obligation to pay the debt will be settled by completion of the consumer proposal. The creditor will be permitted to pursue your ex-partner for payment of the debt, as outlined above.
- Our staff will review with you (and a lawyer if appropriate) the terms of your separation agreement or divorce order to determine if filing a consumer proposal may have other implications that need to be considered.
Students and Student Loans
If you’re a student, or are saddled with student loan debt, disclose your debts to your Licensed Insolvency Trustee (LIT) and creditors. If you’ve been out of college or university for more than seven years on the day you file your consumer proposal, this debt (like all other unsecured debts) will be compromised by a consumer proposal. If it’s been less than seven years, the portion of the student loan balance not paid from the consumer proposal will survive the proposal’s completion. This must be paid, and interest will accrue until it is paid.
A consumer proposal is not a quick solution to student loan debt challenges. However, it can extinguish other debts, giving you more freedom to repay a student loan.
Canadians Living Abroad
Do you live abroad? Are you stuck with hefty, unpayable debts back in Canada? Non-resident Canadian citizens are eligible to file consumer proposals. Currently, the Baker Tilly Ottawa Ltd. team works with many individuals in the United States, England, South America, and Australia. If you’re concerned that being an expat living abroad is another hurdle to solving your debt crisis, don’t worry. We’re here to help!
Self-employment presents you with a few more complications that you’ll have to consider if you’re looking at filing a consumer proposal:
- The type of business you own and operate;
- Whether or not you want to stay in business;
- Whether or not you have employees and owe them money;
- If you have a landlord for your place of business to whom you owe money; and
- Whether or not there are CRA obligations for HST, source deductions, or income tax.
Self-employment presents a variety of unique issues that need careful consideration before filing a consumer proposal. Our team has plenty of experience in helping individuals who own and operate their own business get their financial situation under control.