case studies,  consumer proposal

A conversation with someone who inherited $20,000 after filing a consumer proposal

Hi.

I’m in the last stages of finalizing my consumer proposal. I have a video call with my assigned trustee in a few days, which I’m very nervous for.

To make it more complex, I just ended up with a surprise inheritance for 20,000 dollars. I have not finalized my consumer proposal yet, and my creditors still have to agree on it etc., etc..

I’m really scared this sudden change in my financial situation will mess with my proposal being finalized.

I would much rather my credit tank for a few years and have an easier time mentally and financially, than be back barely making ends meet…

Does anyone have any advice? Or know what the trustee call will entail?

Will my inheritance mess up this proposal from happening? Do I need to report it to the credit consolidators or the trustee?

Thank you so much for your help.

So this issue is whether you need to disclose this to the Licensed Insolvency Trustee.

You should speak to a lawyer who practices bankruptcy law for advice on this.

Please note that LITs are not lawyers; most are actually CPAs who just happen to have a license from the Government of Canada to administer insolvency engagements. You need to speak to a proper lawyer.

Also, from the wording of your response, it appears that you used a middleman (a debt consultant) to file your consumer proposal.

Did you realize that you could’ve gone directly to a Licensed Insolvency Trustee for a free consultation and filed your CP directly with them?

These middlemen generally add no value to the process and I hope you didn’t pay them anything. When someone files a CP with me, the only payment I ask for up front when a CP is filed is the $114.88 filing fee that must be paid to the Office of the Superintendent of Bankruptcy. They don’t pay anything else (i.e., their monthly proposal payments) until their CP is approved.

The Office of the Superintendent of Bankruptcy has issued a position paper about these middleman and the LITs who work with them – I strongly advise that you read it.

Oh wow. They were a non profit so I had no idea you could even do it without them. It’s costing me 3 payments of $750 to file with them.

The term “non-profit” is meaningless; if an organization earns $10 million in revenue and pays out that $10 million in salaries it’s technically a “non-profit”.

Speak to your assigned LIT and raise this issue with them. It’s completely obscene that you paid $2,250 when you didn’t have to.

Okay I will. Thank you for the help.

In respects to this inheritance, do you know if this is going to greatly affect things going forward?

Thank you 

Again, you should speak with a lawyer. A lawyer would be familiar with any case law that exists that’s dealt with situations similar to yours.

FYI, an LIT doesn’t technically work for you: he is supposed to act as an unbiased facilitator of a settlement between you and your creditors. You are not his “client”.

Ok thank you, that is really good to know. 

Victor is the President of Fong and Partners Inc. He is a Licensed Insolvency Trustee and Chartered Professional Accountant. With many years of experience in the insolvency field, Victor has been involved in both corporate and consumer insolvency engagements. Previously with a large national firm, Victor founded Fong and Partners Inc. so that he could dedicate his professional life to help people from all walks of life to deal with their debt.