Is it Possible to File a Joint Consumer Proposal?

Is it Possible to File a Joint Consumer Proposal?

Written by Caitlin Wood
Last Updated June 8, 2021

Yes it is possible, and actually very common, to file a joint consumer proposal. This is when, typically a married couple or a couple whose finances are one and the same, file a consumer proposal together. The definition of a joint consumer proposal is not as clear as you might think it would be. Both parties that wish to file a joint consumer proposal must have “all or substantially all” the same debts. While this may seem confusing and there really isn’t a legal definition for the term “substantially all”, joint consumer proposals are approved based on common sense. So if it makes sense to allow two people to file jointly, because they share a large amount of debt, then generally speaking the process will proceed.

Looking for information on filing a consumer proposal on your own? Click here.

Who Can File a Joint Consumer Proposal?

Filing a joint consumer proposal in Canada is quite similar to filing one on your own, you may file with someone that you hold common debts with. You must still meet the specific requirements and standards of a regular consumer proposal in order to file jointly (watch this video for a full explanation of the requirements). As we discussed before there is no set definition for “substantially all”, but as a general rule most bankruptcy trustees will not allow you to file a joint consumer proposal if the two parties in question do not share at least 90% of the debts that are to be cover in the proposal.

Furthermore, if you wish to file jointly, it must “make sense”. Look at it this way, it probably doesn’t make sense for you to file a joint consumer proposal with your neighbor, but it definitely makes sense to file a joint consumer proposal with your significant other. Here are a few situations when filing jointly “makes sense”:

  • A legally married couple. It makes sense for a couple to file a consumer proposal together because the debts in question were likely accumulated together. Also, if you file jointly instead of filing two separate proposals you’ll only need to pay the administrative fees once.
  • Parent and child. Parents and children often have interconnected finances and therefore debts, so filing jointly makes sense.
  • Business partners. While filing a joint consumer proposal with your business partner is possible, as you probably have credit and loans in both your names, there is one big condition. Your proposal will probably not be accepted if either of you have a lot of personal debt. This is because the vast majority of each of your debts needs to be debt you hold together.
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Advantages and Disadvantages

There are of course both advantages and disadvantages to filing a joint consumer proposal, if you’re considering filing a joint consumer proposal it’s important that you consider any issues that might arise and determine whether or not it is the best option for your situation.

Advantages

  • Filing jointly increases the maximum amount of debt you’re allow to have from $250,000 to $500,000.
  • It technically costs less; you’ll only need to pay the administration fees once instead of twice. This means that more of your income can go towards paying back your actually debts.

Disadvantage

  • Both people are equally responsible for the payments. If one person is unable to make the payments anymore or simply stops making payments, the other person is legally responsible for those payments. Depending on the relationship you have with the person you want to file jointly with, this is an important point to consider.
  • If you stop making payments your consumer proposal will be annulled (learn how to avoid this here).
  • A specific payment will be agreed upon in the proposal. It’s up to the two parties to split it equally or figure out a payment agreement between them, your trustee will probably not do this for you.

Concerned about whether your creditors will accept your consumer proposal?

When is it the Right Choice?

Consumer proposals, joint or single, are meant for very specific situations where the debt in question has become too much to handle and your income it not sufficient enough to cover it. While a consumer proposal is less extreme than bankruptcy it is still a serious financial decision and all other options should be carefully considered before you make your final choice.

One of the most common reasons why a joint consumer is the right choice for someone is the ability to include double the amount of debt that a regular proposal allows. Since consumer proposals are meant for those in need of serious financial help, people tend to want to include as much of their debt as possible.

As with all big financial decisions, we recommend that you speak with a professional who can help you decide what the best choice for you is.

Click here for information on how a consume proposal can work for you.

Get Started Today

The sooner you get started, the sooner you’ll be on your way to a debt free life. If you’re interested in more information on joint consumer proposals get in contact with us today, one of your debt management experts will be happy to help you.

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

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