consumer proposal

Will filing a consumer proposal cost you your job?

Hello all, not sure if this is the best place to post, so please direct me elsewhere if it’s not here!

I’m in a bit of a cross roads. I earn good income, $61k salary, plus my partners income ($20k-$30k shift work) gross annually. I was pressured by family to go to university immediately after high school and under ill advice, told to take the full student loans out.

That landed me in $40k debt of student loans with nothing to show and it’s been downhill since. At the same time, I had good credit as a new adult and a lot of bills were put under my name without my knowledge by my family. I never reported it as fraud as my parent was in a financial bind raising 4 kids on their own so I just took the hit. I went and got a credit card to pay off the bills they let go to collections and that’s when I learned I had around $5k owing from utilities.

I’ve been in debt since I was 18 and up until my job in finance (by total fluke) I had no idea how to even have a budget. I got my debts manageable but some emergency would come up and then I’d be justifying every other purchase until now where I’m at a total $78k in debt. $14k of it is secured with a vehicle, $21k student loans and the rest is accumulation of consumer debt and unforeseen emergencies.

Because of my job, if I file consumer proposal I will have to resign. I used to enjoy my job but the sales pressure and lack of morals in the business has beaten me to a pulp. I’ve calculated that I can consolidate all but vehicle loan into a 5 year with biweekly payments of around $875. Currently my payments total $750 biweekly but that’s on an averages 8 year amortization.

Are consumer proposals as bad as they seem? I want out of this job badly (it’s making me extremely depressed) but my debt loads hold me hostage. If I can get a proposal with a much smaller payment I’d be open to taking the 5-7 year credit hit and a base pay job/maybe attend trades school, I just don’t want to be in this continuous debt cycle or this leech of a corporate rat race job anymore.

This was a lot longer than I anticipated so if you read it all I really appreciate it as well as any advice!

Victor Fong, Licensed Insolvency Trustee responds:

Licensed Insolvency Trustee here. FYI, you cannot be dismissed just because you’ve filed a consumer proposal – here’s the pertinent section of the Bankruptcy and Insolvency Act (BIA):

No dismissal, etc., of employee

66.36 No employer shall dismiss, suspend, lay off or otherwise discipline a consumer debtor on the sole ground that a consumer proposal has been filed in respect of that consumer debtor.

Now, if you’re a licensed professional who’s certified by a professional association (like a CPA) that might be a different matter. Most professional associations would require you to report to the governing body the fact that you filed a bankruptcy or consumer proposal.

But an employer cannot force you out of a job just because you filed a CP. It’s against the law.

As to your question: filing a consumer proposal is fine so long as you understand the impact on your credit (which you do).

The biggest hurdle is getting your creditors to approve it, but once they approve it, you can pay it off as quickly as you want to. The faster you pay it off, the faster your CP will be removed from your credit history (i.e., it gets removed 3 years after you pay your CP in full or 6 years after you file, whichever is sooner).

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.