While most consumer proposals are filed individually, it is also a possibility to file for a joint consumer proposal. When two people have nearly substantial debts they are eligible to file a joint consumer proposal, legally referred to as “commonality of debt”. Debts however don’t have to be identical but as a general rule of thumb more than half of your debts must be common.
But whether it is a good idea or not depends on the circumstances at hand. Here’s what you need to know before considering your options.
Advantages of a Joint Proposal
Reduced Total Payments
Joint consumer proposals can be filed even with less offering to the creditors’ altogether. For example if you were to file two separate consumer proposal you may have to give 50 cents per dollar (25 cents on each). In a joint consumer proposal banks may also accept 35 cents per dollar offer, making them less expensive.
Combined Debts
A separate proposal limit is usually up to $250,000 excluding the mortgage, whereas when co-filing a joint consumer proposal the limit exceeds to $500,000.
Easy management
It is obviously easier to manage payment per month than two separate payments. This is less stressful than taking care of individual payments.
Disadvantages of a Joint Proposal
Although joint consumer proposal may seem like your best option, here are some of the cons that you simply can’t neglect.
Creditor votes ‘no’
A creditor may be willing to accept a proposal from one person but due to prior difficulties of the other ask for a lot more money to accept his proposal. In under such a circumstance there are chances that the creditors will say no. This would not have happened if both the parties had filed the consumer proposal individually.
Divorce or separation
Suppose the husband and wife had filed for a joint consume proposal and then went through a divorce, then that could be a potential problem. If one spouse kept making half payments while the other rejected to do so, the whole proposal will be nullified. So the key to remember is consider all the pros and cons beforehand and make sure that if such a time comes, you both will fulfill your obligations.
Credit Rating Impact of Filing a Joint Proposal
In most cases joint or individual consumer proposals have similar substantial impacts. All your debts are reported as an R7 and after you make all the payments the proposal remain for three years on your credit report.
The only difference can be observed if one spouse pays off all his debts before the other. For example one spouse paid off debt in two years and the other in 4 years. Proposal on the second spouse will obviously remain longer on his credit report.
However, if one spouse wants to rebuild credit faster, it will be more sensible to file two separate proposals and devote all the additional funds into paying one off first. But it is always wise to pay off all the debt as soon as possible which is why joint proposals present a preferable option.