law suit

I`m thinking of doing a consumer proposal but I have recently started a law suit for a car accident that I was involved in last summer. Are the proceedings I receive from the law suit given over to the proposal or do I get to keep the money. Also, my husbands income varies greatly with overtime, is it possible that we set something up with lower payments for when he has breakup but when the paycheques are higher, can we pay more to get rid of it faster? Are tax returns kept in a proposal like they are in a bankruptcy

Posted on Thursday, March 5, 2009 | Filed under: Bankruptcy
 posted by Questions @ 8:48 am 1 Comment
1 Expert Comment:

 At March 6, 2009 | 7:16 am , Barton Goth, Trustee in Bankruptcy Said...

The lawsuit is tricky. A portion of the lawsuit is lost if a bankruptcy is filed (i.e. loss of income, asset recovery) and a portion is protected (i.e. personal injury, pain suffering). So this has to be taken into account in a proposal as legally you have to offer at least as much to the creditors as they would receive in bankruptcy. So likely the easiest way is to offer the non-exempt portion directly to the creditors as part of the proposal. Perhaps a clause that says “any non-exempt proceeds from the settlement of the existing lawsuit that are received during the duration of the proposal will vest in the trustee and create a benefit to the unsecured creditors.” Without a provision like this it is doubtful that any of your creditors would even consider cooperating with a proposal.

As for spring break up, a proposal can be set up so that 10 payments are made per year. That way you have 2 months flexibility for spring break-up and then in the other months if able to you can make larger payments to pay the proposal off more quickly.

In terms of tax returns, they aren’t lost in a proposal as they are in bankruptcy.

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