When you meet with your advisor, they will review your entire financial situation. This includes your household income, your current fixed expenses, and your assets.
By doing this, they can get a good picture as to what your household can afford for living expenses and debt expenses. This information also helps to determine whether a consumer proposal is a good option, or whether there is a better choice for your situation.
One of the items reviewed is your housing cost. For many people, the mortgage that they are paying, and the other associated housing costs, fit within their budget. Many individuals ensure that these payments are up to date, and wish to continue maintaining their payments so they can keep their home.
If your payments are up to date and you wish to keep your home you are allowed to do this in a consumer proposal. In a proposal, your assets do not vest in your administrator, which means they have no interest in them and cannot seize them. Even though the administrator can’t take your home, they are also required to look at whether your house has any equity. This means that if the house would be sold, would there be any money left over after paying the mortgage holder and any associated costs. This is done to help determine what you should offer your creditors in your consumer proposal.
For example, if you have a substantial amount of equity, you would want to make sure that your offer is attractive to your creditors. In this scenario, the administrator is still not taking your home, but they are looking at its value in order to make sure your proposal has the best chance of being accepted.
It may be however, that it’s determined that you cannot afford to stay in your home. If you make that choice to give your house back to the bank, you can do so at the onset of your consumer proposal. By making the decision in the beginning of the process, this ensures that any funds that are left owing to the bank after they sell your house are covered by your proposal payments. In this situation, the administrator can help to estimate the anticipated shortfall and can factor that debt into the payments.
And, finally if you choose to downsize and sell you home it may be that you can use your equity to fund your consumer proposal. This is called a liquidating proposal, and often eliminates the need for monthly payments.
What is important to remember is that even though the administrator may have to determine the value of the house, they have no right to seize your home. The administrator is there to provide helpful advice and guidance so you can make the best choice for your individual situation.