Frequently Asked Questions

Proposal

Who is an Administrator?

An Administrator is a Trustee or other individual designated by the Superintendent of Bankruptcy to administer consumer proposals and provide counselling.

How does a proposal affect my job and wages?

An employer cannot fire, discipline or suspend you solely because you filed a consumer proposal. Once a proposal is filed, all wage assignments and garnishments are stopped. Please note that wage assignments are not legal in Alberta.

Is My Bankruptcy/Proposal Going to Affect My Spouse/Partner?

A party can only be held responsible for repayment of a debt if they signed the original contract, loan agreement or credit card application. If your spouse or partner never signed the original contract; never requested a credit card; or never used your joint credit card, they cannot be held responsible for the debt. In Canada, marriage alone does not make you responsible for your spouse's debts. With respect to credit cards, there are two ways in which the second party can be held responsible for repayment of the debt. One is where the individual actually requests a secondary card and/or signs an agreement saying they accept full responsibility for current and future debt. The other is where the credit card issuer sends a card out in the second individual's name with the primary cardholder's number and the second individual actually signs and uses the card. Use of the card will hold the secondary person responsible for any past and or future debt.

Should you wish to remove your spouse or partner from your credit card or loan document, you must get confirmation in writing from the financial institution. If you do not obtain written confirmation, there is no guarantee the institution has removed the second party from their records. Responsibility for payment of joint debt between spouses as listed in a separation or divorce agreement does not legally bind a financial institution or creditor. Unless you obtain concurrence to the division and re-assigning of responsibility of debt from the creditor, they have the right to take action against anyone who signed on the debt.

Are my spouse's assets or debts included in my proposal?

No. Both your spouse's and your assets are not included in the proposal because assets do not vest with the Trustee when a proposal is filed. Similarily your spouse's debts are not affected by your proposal.

Do I require a lawyer if I go bankrupt or make a proposal?

Generally, you do not require a lawyer to go bankrupt or file a proposal. We recommend that if you have any concerns regarding your conduct before your assignment or proposal, you should discuss these concerns with your own solicitor. If you feel the need for legal advice and cannot afford a lawyer, legal aid may be available.

How does a Consumer Proposal affect co-signers?

Consumer Proposals will not cancel the liability of anyone who has guaranteed or co-signed any loans. These guarantors will still be responsible for the debts less any payments the creditor receives from the Consumer Proposal.

What happens to the PROPOSAL debtor's assets?

The assets generally remain with the debtor. This includes any assets acquired during the term of the Consumer Proposal such as gifts, inheritance or winnings.

What happens to the credit cards in the possession of the PROPOSAL debtor?

The credit cards generally remain with the debtor. However, one should recognize that the granting of the credit cards is a privilege provided at the option of the credit company. When the credit card company learns about the Consumer Proposal they may suspend this privilege.

We believe that it is better to destroy the cards so that the temptation of using the credit if things get bad is not a risk.

Can my landlord evict me or terminate my lease?
No. A landlord cannot evict you or terminate your lease for rent owing when you file your Proposal .

Can my utilities be disconnected?

No. Your fuel, water, electricity and telephone services cannot be disconnected for amounts that you owe when you file. However, the utility companies may require a security deposit to continue service.

Once I have filed a proposal, can I get new debt?

While under a consumer proposal, there is nothing to stop you from entering into any new contracts.

You should know that the filing of the proposal will be reported to the Credit Bureaus by your creditors and that your proposal filing will be available to anyone who conducts a credit bureau search on you. It is unlikely that someone will give you credit if they know that you have filed a proposal.

By filing the proposal you have admitted that you could not pay your debts as they became due. Should you get credit and then have to file an assignment, there is a risk that the creditor who gave you credit under the proposal may have a position that your debt was obtained fraudulently because had they known about your finances, they never would have advanced new credit to you.

We do not believe that it is wise for you to try to get new credit when you have filed a proposal because you could not pay your old debt. You have to admit that credit is not income and even though the terms appear wonderful, you cannot afford new debt..