What types of debts are excluded from a consumer proposal?

_{consumer proposal, unsecured debts, Ontario}

In Canada, a consumer proposal is a friendly way to tackle unsecured debts like credit cards or personal loans, but some debts are off-limits. Secured debts like mortgages and car loans, student loans under seven years old, alimony, child support, and fraud-related debts aren’t eligible.

_{Understanding consumer proposals for unsecured debts in Canada.}

Question

What cannot be included in a consumer proposal? I’m interested in finding out if there are certain types of debt that aren’t covered under a consumer proposal. It’s better to know what the limitations are upfront. What’s excluded from the mix?

From: Anonymous Question, Ontario (ON)

Debt Insiders Answer

In Canada, a consumer proposal is a handy way for someone to settle a chunk of what they owe to creditors over time. However, it doesn’t cover every type of debt. For instance, secured debts, such as mortgages and car loans, which come with collateral, can’t be bundled into this. Then there’s student loan debt—if it’s been less than seven years since you left full-time education, those loans might be off the table too. Also, don’t count on including alimony or child support payments, as these are court-mandated. And if any of your debts come from less-than-stellar actions like fraud, they’re definitely not eligible.

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

In a consumer proposal in Canada, the following types of debt cannot be included:

1. Secured debts, meaning debts where the lender has a legal claim to specific property (e.g., mortgages and car loans).
2. Debts arising from court fines and penalties.
3. Family support obligations, such as child support or spousal support.
4. Student loans if the borrower has been out of school for less than seven years.
5. Debts that are considered non-dischargeable under the Bankruptcy and Insolvency Act.

These exclusions are outlined in the Bankruptcy and Insolvency Act and related regulations, specifically in sections addressing consumer proposals and their limitations.

From: This answer is provided by scanning the OSB Bankruptcy & Insolvency Act and related directives

Related Questions

Here are the top 5 most frequently asked questions related to what cannot be included in a consumer proposal, based on the provided sources and general trends in consumer inquiries:

1. Can student loans less than seven years old be included in a consumer proposal?

No, student loans less than seven years old cannot be included[2][5].

2. Can court-ordered debts, such as alimony or child support arrears, be included in a consumer proposal?

No, court-ordered debts, such as alimony or child support arrears, cannot be included[5].

3. Can mortgages be included in a consumer proposal?

No, mortgages cannot be included in a consumer proposal[2][5].

4. Can home equity loans and lines of credit be included in a consumer proposal?

No, home equity loans and lines of credit cannot be included[5].

5. Can car loans be included in a consumer proposal?

No, car loans cannot be included in a consumer proposal[5].

If you have a question about debt see our debt questions or ask your own debt related question.

References

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