All debts can be included in your Consumer Proposal. Based on the type of debt, they are handled differently as explained below:

Unsecured debt

All your unsecured debts must be included in your Consumer Proposal to ensure that all creditors are treated equally. An unsecured debt is when you have not given the creditor the right to seize something that you own if that loan is in arrears (example: a car finance loan or a house mortgage). The most common of the unsecured debts are credit card balances, payday loans, installment loans, student loans, overdrafts, personal loans and even tax debt owed to the Canada Revenue Agency (CRA). These debts not backed by collateral like secured debts.

These debts can be negotiated and usually reduced through a Consumer Proposal, allowing you to make affordable monthly payments to your creditors. This solution can only be administered by a Licensed Insolvency Trustee, like Baigel Corp.

Secured debt

The most common secured debts are home mortgages or car loans.  They include any debt where you allowed the lender to register security against what you are purchasing or what you already own. 

It is your right to walk away from a secured debt and included in your Consumer Proposal. However, you would have to allow the secured creditor to seize the asset that you pledged for that loan. This often makes sense where what you owe to that creditor is much more than the value of the asset you would have to surrender. This decision is best made after discussion with the Licensed Insolvency Trustee and before the Consumer Proposal is filed.

You can choose to keep the house/car/etc. but that debt must be paid according to the original terms or through separate arrangements you make directly with the lender. It is important to discuss these debts with the Licensed Insolvency Trustee so he / she can ensure you fully understand your choices.

The most common secured debts are home mortgages or car loans.  They include any debt where you allowed the lender to register security against what you are purchasing or what you already own. 

It is your right to walk away from a secured debt and included in your Consumer Proposal. However, you would have to allow the secured creditor to seize the asset that you pledged for that loan. This often makes sense where what you owe to that creditor is much more than the value of the asset you would have to surrender. This decision is best made after discussion with the Licensed Insolvency Trustee and before the Consumer Proposal is filed.

You can choose to keep the house/car/etc. but that debt must be paid according to the original terms or through separate arrangements you make directly with the lender. It is important to discuss these debts with the Licensed Insolvency Trustee so he / she can ensure you fully understand your choices.

Excluded debt (debt that does not go away through the Consumer Proposal)

Under the law, all debts need to be disclosed. This includes certain debts that while included in the proposal, may still be owed after your Consumer Proposal is completed. These include court fines, child and spousal support and certain student loans payments which remain your responsibility even after filing a proposal.  Payments that you are required to make on the excluded debt during the time of your Consumer Proposal can be a valid reason to reduce what your Consumer Proposal creditors would otherwise expect to be paid. This is a complex area of Consumer Proposal law, and you should discuss all details with your Licensed Insolvency Trustee from Baigel Corp.