With respect to your mortgage, secured creditors are not affected by any insolvency filing, whether it is a consumer proposal, or a bankruptcy. So, if you want to stay in your home, you will have to bring your mortgage payments current. Most mortgage companies do not want to take your house away from you; they want their payments. If everything is current, they will probably leave you alone.

On the topic of your home, if there is equity in your home, you will have to make arrangements with your trustee to “buy out” this equity, as it is an asset of your’s that should be used to pay your creditors.

With respect to income taxes, yes personal income tax debt are included in a consumer proposal.

What you have described so far is a fairly complex situation. You should probably be meeting with a bankruptcy trustee to get some professional help with your financial situation.

The first problem is that you are not entitled to an automatic discharge from bankruptcy, as you would be if this were your first bankruptcy. There will be a court hearing in Toronto and the court will decide what conditions to put on you before you are released from bankruptcy. The court will look at the cause of your current financial difficulties and compare them to your previous ones. Basically, if the cause is the same, the court will likely punish you by extending the time period of your bankruptcy and requiring you to repay all or a portion of your debts.

The second problem is the income level of your household. You will be required to make payments to your creditors based on federal government guidelines for household income. These payments will be significant, and will be in addition to the payments mentioned above (a condition of your discharge).

I don’t think that bankruptcy is a solution you should be looking towards, even though you have done this in the past. In your case, I would recommend you consider a consumer proposal, which is a bankruptcy alternative. A consumer proposal is an offer you make to your creditors (through a trustee in bankruptcy). There are several benefits to filing a consumer proposal. The most important is that you are not bankrupt; a consumer proposal is NOT bankruptcy. Second, your creditors likely accept your consumer proposal because they will be receiving more money than they would if you filed for bankruptcy. Third, you will have a longer period of time to make payments in a consumer proposal, up to 5 years, and these payments can be built into a realistic monthly budget. Finally, you will have the personal satisfaction of knowing you made a payment arrangement with your creditors and avoided filing for bankruptcy.

If you would like more information on this topic, feel free to call us at 310-PLAN, or your can e-mail us a question.

Feel free to contact us to help you review your RRSP.

If you have large debts but want to keep your RRSP, another option to consider would be a proposal.

I am not sure of your comment that you “can no longer afford to pay the loan”, because as a guarantor, you wouldn’t be making payments. I assume you mean that if you were called on to honour your guarantee, you would not be able to afford the payments.

If you have any further questions, feel free to contact me.