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HOW FLEXIBLE ARE CONSUMER PROPOSAL PAYMENTS?

September 5, 2017

Can the proposal’s terms be varied (changed) once agreed to?

Consumer Proposals can be made provided that the total of all debts excluding a mortgage on a principal residence do not exceed $250,000. That value does, however, include car loans and mortgages on properties that are not a principal residence.

Proposals can be very creative, for example they can made based on a lump sum payment; a combination of lump sum and monthly payments; periodic payments; or the outcome of a future event that may may be unknown such as the sale of a property with the “net proceeds” going to the proposal and so on.

We have helped a debtor to file a proposal that allowed for payment variations based on future income, if the income went up the payments went up, if the income dropped so did the corresponding payments.

Once in a proposal the terms can be varied by the trustee (administrator) calling a meeting of creditors to consider an amendment to the proposal. So if the debtor lost a job or suffered some other form of financial setback the creditors may accept a reduced payment level or a shortened term.