Debt is a serious strain on everyday life and can cause extreme worry and frustration for any individual and their family. If you have total debts that do not exceed $250,000 and you have assets to protect, then filing for a consumer proposal can be the right solution for you.
What’s the Process?
Only a Licensed Insolvency Trustee, formerly known as a bankruptcy trustee, can set up a consumer proposal for you. You’ll have to pay an initial setup fee and, if your proposal is accepted by your creditors, you proceed by paying the balance. From there, your trustee will keep a small portion of your future payments as part of an administration fee. No proposal is legally binding until the creditors who own most of your debt agree to the arrangement. Once they do, you have a maximum term of five years to repay the agreed upon amount.
What Are the Advantages?
If you are worried about your debt and hoping to discover how a consumer proposal can help you, then consider the benefits of one sooner rather than later. For one, a consumer proposal can make a significant reduction in the amount of debt you are required to pay your creditors. If you can’t afford to repay all of what you owe, have a stable income, and have enough money in your budget to make monthly payments, then this type of arrangement could suit your situation best.
What Are the Disadvantages?
If you’re reading along and thinking that this route might be the right one for you, then why not
call us to learn about consumer proposal to see if it really is the best way to go? There are plenty of reasons why filing a proposal with a Licensed Insolvency Trustee can help you, but you should also be aware of the disadvantages of this arrangement.
For example, you have to be approved by the Court to file for a consumer proposal and if you’re trying to get relief from student debt, you should know that student loans less than seven years old do participate in a consumer proposal, but they are not discharged and any balance not paid through the consumer proposal will still be collectible.
When Is It the Right Things to Do?
Maybe you’re trying to figure out which option is best for you: bankruptcy vs consumer proposal and you’re not quite sure of an answer. That’s why it’s important to consult a bankruptcy trustee to help you navigate your options. Still, there are some main classifiers that make a this an effective way of consolidating your debt:
- You have a stable income
- You can’t afford to repay all of what you owe
- You can commit to making regular, monthly payments
- You don’t qualify for a debt consolidation loan
- Your debts are too high for a debt management program
Choosing a consumer proposal is one of the last ways to avoid bankruptcy and it can pause collection efforts from unsecured creditors, which means it may be just what you need to find some relief from difficult debt.
There are plenty of resources out there to help you learn about debt relief. If things are seeming grim and you are considering bankruptcy, don’t worry. Take the first step to meet with a bankruptcy trustee to evaluate your situation, discuss your options, and find the best solution to your financial problems.