If you are struggling with debt, you may be considering a consumer proposal. This is a great option for people who want to avoid bankruptcy. However, there are some key things you need to know about consumer proposals before you make a decision. In this article, you will learn about the six most important things you need to know about consumer proposals!
It Will Save You From Bankruptcy
The main perk of this process is the fact that your wealth is actually well-protected. It’s known that a consumer proposal can help spread out payments, protecting you from bankruptcy. You’ll be able to protect your assets such as your home and car, which is not the case with bankruptcy. This process can help you keep what’s yours while getting a handle on your debt.
If you’re looking into consumer proposals in Canada, know that they can be an excellent way to get out of debt and protect your assets. Keep these key things in mind, and always speak to a professional before making any decisions about your finances.
Saving money is always important, and your debts will be largely reduced through a consumer proposal. In fact, you may only have to pay back a percentage of what you owe, and the rest is forgiven. This can provide much-needed relief if you’re struggling to make ends meet each month.
It’s important to note, however, that a consumer proposal does not eliminate all of your debts. You will still be responsible for any secured debts, such as a mortgage or car loan. However, unsecured debts, such as credit card debt, can be forgiven through a consumer proposal.
If you’re considering a consumer proposal to help reduce your debt burden, be sure to talk to a licensed insolvency trustee. They can help you understand the process and whether it’s the right option for you.
A consumer proposal is one way to deal with reducing your overall debt load. If you are struggling each month to make ends meet, this type of arrangement may provide some relief. With a consumer proposal, unsecured debts, such as credit card debt, can be forgiven.
No Extra Fees
When it comes to payments, there are usually lots of extra fees. These are the following:
- Setup Fees
- Upfront Payment
With a consumer proposal, you don’t have to worry about any of these fees. You also don’t have to make a large upfront payment. This makes consumer proposals much more affordable than other debt-relief options.
For example, let’s say you have $30,000 in debt. With a consumer proposal, you may only have to pay back $15,000 over a period of 60 months. This means that you would save $15,000 in interest and fees.
This is a completely legal process governed by the Bankruptcy and Insolvency Act of Canada. A consumer proposal can only be made by a licensed insolvency trustee.
When you file a consumer proposal, an automatic stay of proceedings comes into effect. This means that your creditors are legally prevented from taking any collection action against you.
This includes wage garnishments, freezing bank accounts, and legal actions such as lawsuits or seizure of assets. The stay of proceedings is in place until your consumer proposal is completed or terminated.
You also have a lot of flexible options when it comes to consumer proposals. You can decide how much you want to pay each month, and for how long. If your situation changes, and you can’t afford your payments anymore, you can always adjust your proposal.
For example, let’s say you originally proposed to pay $600 per month for 60 months. But after 20 months, you lose your job and can only afford $300 per month. You can go back to the trustee and change your proposal to reflect your new budget.
Or, let’s say things are going great, and you want to get out of your consumer proposal early. You can do that too! If you have a lump sum of money (maybe from a tax refund or an inheritance), you can use it to pay off your consumer proposal in full.
You Pay What You Can Afford
It’s important that you’re able to protect your assets and with consumer proposals, you’ll be paying only what you can afford. This is determined by your monthly income and expenses. You’ll work with a consumer proposal administrator to develop a budget and propose an affordable payment plan to your creditors.
If you’re unable to make the payments outlined in your consumer proposal, the court may declare the proposal void and order that your estate is liquidated.
Consumer proposals are essential in protecting you from bankruptcy, and they will reduce all your debts. You won’t have any extra fees in this completely legal move, which allows you a lot of flexibility. Finally, you will only be paying what you can afford, giving you a lot of leverage over time!