What Assets Can You Keep with a Consumer Proposal?

Does a consumer proposal allow you to keep your assets?

Yes, a consumer proposal allows you to keep your assets.

Since every situation is unique, a Licensed Insolvency Trustee such as Mallette will analyze the value of your assets, your debts, and your ability to pay in order to structure a realistic proposal. The goal is to reduce your debt while protecting what matters most to you.

What assets can you generally keep?

One of the main advantages of a consumer proposal is that it allows you to retain your assets. Here are the main assets you can typically keep.

1. Home

You can usually keep your home as long as you continue making your mortgage payments. Since a mortgage is a secured debt, it is not included in the proposal. As long as you meet your obligations, you can maintain ownership of your property.

2. Vehicle

You can also keep your vehicle, provided that your payments are up to date and you continue making loan or lease payments. If the vehicle is fully paid off, you keep it without restriction. If the payments become too high, it may be possible to return the vehicle and adjust your financial situation.

3. RRSPs

RRSPs are protected in a consumer proposal. Unlike certain bankruptcy situations, you keep all your accumulated savings, which helps preserve your long-term plans, such as retirement.

4. Personal belongings

Your personal belongings (furniture, appliances, clothing, everyday items) are not affected by the proposal. You can continue using them without having to sell them to repay your debts.

5. Work tools

The tools necessary for your work are preserved. Whether you are an employee or self-employed, you must be able to continue generating income. The proposal takes this reality into account.

6. Tax refunds and benefits

Tax refunds and certain government benefits may continue to be paid to you. However, their treatment may vary depending on your situation, particularly if you have debts with tax authorities. A personalized analysis can help clarify this aspect.

Under what conditions can you keep your assets?

Even though a consumer proposal allows you to retain your assets, certain conditions must be met.

Continue secured payments

Secured debts, such as a mortgage or car loan, are not included in the proposal. To keep the associated asset, you must continue making payments on time. In case of default, the creditor retains their rights and may repossess the asset.

Realistic payment capacity

The proposal must be based on a realistic ability to pay. The amounts offered to creditors must fit within your monthly budget, while allowing you to cover essential expenses and financial obligations. A proposal that is too high may become difficult to maintain.

Net worth and financial situation

The value of your assets and your overall financial situation are taken into account. The amount offered to creditors must be at least equal to what they would receive in a bankruptcy. This directly influences the structure of your proposal.

Consumer proposal vs bankruptcy: what’s the difference for your assets?

The main difference between a consumer proposal and bankruptcy lies in how your assets are treated.

With a consumer proposal, the goal is to settle your debts without having to liquidate your assets. You keep your property in exchange for a repayment plan adapted to your financial capacity.

In contrast, in a bankruptcy, certain assets may have to be surrendered or liquidated to repay creditors. Although some protections exist under applicable laws, bankruptcy can lead to the loss of assets with significant equity.