Joint Debt & Consumer Proposals: What You Need to Know

couple talking about their finances

When debts begin to accumulate and become too much to pay off, filing for bankruptcy may seem like the only option you have left.

Whether due to unemployment, extensive medical bills, or a poor use of credit, financial crises can happen to anyone. In some cases, you may have a shared debt with a partner or significant other which comes in the form of loans, credit agreements, and shared bank accounts.

When you take out a loan or accumulate some other form of debt with another person, also known as joint debt, both you and your partner become responsible for paying off the whole amount rather than just your half. In case one of you isn’t able to pay off the debt, you both are still liable for the full amount no matter how that money was used.

If both parties are unable to pay off their loans, they may file for a joint consumer proposal to help with the payments.

What is a Joint Consumer Proposal?

A consumer proposal is an alternative to bankruptcy that allows you to pay off some or all of your debt in monthly installments without having to give up any assets.

If you or your partner files for a consumer proposal, you’re both still responsible for that debt. This proposal can be filed by more than one person as long as most or all of their debts are the same. In order to become eligible for a joint consumer proposal, each person must be qualified to file a proposal individually.

To ensure your proposal is successful, a Licensed Insolvency Trustee will work with you to determine how much you can afford to pay back and what sum the creditors are willing to accept.

Benefits of Filing for a Consumer Proposal

The purpose of a consumer proposal is to help you get out of debt sooner by paying a portion of the money you owe without giving up your possessions.

The biggest advantage of filing for this proposal is that you’ll be able to keep your assets protected, whereas in bankruptcy all non-exempt property is surrendered. In addition to material items and land, you’re able to keep investments, tax refunds, and equity in your home.

Surplus Income is a penalty that makes your bankruptcy payments higher depending on your income. With a consumer proposal, you are only responsible to pay a set amount every month that is not subject to change.

This alternative option also allows you to negotiate how much of your debt you can repay. In some cases, a large percentage of your debts is reduced and your monthly payments are lowered.

Lead a Debt-Free Life With Lazard and Associates

Are you struggling to pay back your debt?

Filing for bankruptcy may seem like the only viable option, but if your debts do not exceed $250,000, a consumer proposal may be the perfect solution for you. When you borrow money or take out a loan with a partner, you enter a joint debt but may still qualify for a joint consumer proposal.

A Licensed Insolvency Trustee will evaluate your financial situation and work with you to figure out a plan that suits both parties. We’re happy to walk you through every step of the process and address any questions or concerns you may have.

To find out if a consumer proposal is the right solution for you, get in touch with one of our Licensed Insolvency Trustees today.