Consumer Proposal vs Debt Settlement

Table of Contents

Consumer Proposal vs Debt Settlement: Differences

The differences between a consumer proposal and a ‘debt settlement’ are significant.

Knowing, and understanding the differences can save you thousands of dollars and months of unnecessary stress.

Consumer Proposals

Consumer proposals are legally binding agreements between debtors and their unsecured creditors, that are filed with the government and managed by federally licensed Trustees in Bankruptcy, such as David Sklar & Associates. All fees and procedures are set and overseen by the Bankruptcy and Insolvency Act and the Office of the Superintendent of Bankruptcy.

Creditors usually agree to a consumer proposal, because they will receive less if the debtor takes the next step and goes into bankruptcy.

If a majority of creditors (in terms of debt owed) approve a consumer proposal, then any creditors who voted against it, are required, by law, to honour the terms of the proposal.

In a consumer proposal, creditors agree to accept a reduced repayment of the debts that are owed to them, to stop all interest charges, and to stop all collection efforts. The debtors, agree to repay the creditors set amounts (usually in monthly payments), for a period of up to 5 years, and to attend credit counselling. The funds are paid into the trustee who holds them in a legal trust and distributes them to the creditors as agreed to in the proposal.

At the successful completion of the consumer proposal, the debtor is legally released from the debts covered in their proposal with a discharge.

Debt Settlements

The Ontario Ministry of Consumer Services has issued a Consumer Alert about Debt Settlement that advises caution and warns of such practices as misleading contracts, pressured sales, excessive fees, and perhaps most importantly – the failure to actually get the debts reduced.

Both Manitoba and Alberta have passed legislation to protect consumers from debt settlement companies.

The ‘debt settlement companies’ we are discussing are the unlicensed organizations who promise to negotiate a settlement with creditors, require a substantial upfront payment, and frequently leave their clients in far worse financial shape.

To be clear: the ‘debt settlements’ we are discussing are not the ‘debt management programs’ that are available through non-profit, licensed counsellors for solvent debtors.

Normally, a debt settlement company with tell their clients to stop paying their creditors, and send the money they would have paid, to the debt settlement company instead. Once the substantial settlement company’s fees have been paid up front, and significant funds have built up (a process that can literally take years) – the debt settlement company will then contact the creditors to see if they can cut a deal.

The pitch is, the credit companies will be so glad to get any money after such a long time without payment, they will be willing to settle.

The reality is, the credit companies will continue to call for their money and may take legal action. They are under no obligation to negotiate.

Use Caution – And Get All the Facts

If You Are in Serious Debt Trouble

If you live in the Toronto area and are in overwhelming debt, call the caring, licensed professionals at David Sklar & Associates at 416-498-9200 for a Free, confidential consultation. During your consultation, we will go over your financial situation, and discuss all of the options you have for getting out of debt and getting on with your life.

 

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt, call us at 1-844-962-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

Share This!

I had a great experience with Jerry Janiec and his team at David Sklar and associates. Within a week I was already accepted and filed for bankruptcy and in a few months I will be debt free! It feels like a lot of stress is off my shoulders. Jerry and his team are very friendly, helped me along the way and was there to explain every detail of the process with me. He gave my his card and is just an email/call away if I need any help with paperwork and completing my duties. He is a very patient and kind professional and I am so glad I chose him and this company to help me fix my financial problems. If you need help with a consumer proposal or bankruptcy (like I did) I highly recommend Jerry Janiec and David Sklar and associates!
Lisa Gomez
1709492022
Very professional and caring. Cori, explain everything and listened to my situation. If I didn't understand, she will explain it again. I'm glad that I went to David Sklar and Associates for my financial difficulties.
Richard Hong
1709358914
Great experience with this company . Especially Jennifer N. communication was amazing and really helped out my situation. Highly recommended her and David S .
Jay Mil
1709336666
Everything went well. I will update in 5 years
Trisha C
1709311761
My experience with Cori was phenomenal. Cori took the time to explain the process thoroughly, listened to my concerns and reassured me. Cori has exceptional people skills and cares about the people she is helping. The experience throughout was professional, kind, warming and inviting.
Angie
1709250956
A huge thank you to Jackie S and to the David Sklar and Associates team. Steps made easy , Jackie S has been there during the entire process , whether it was through emails or phone calls . I felt acknowledged and respected . I’d recommend David Sklar and Associate at a heart beat !! Cheers , Dennis
Dennis Armstrong
1709249142
Very happy to talk with grace and she explained my options.Grace is very knowledgeable,friendly,and helpful. She made feel very comfortable,with her help I am on the road to be debt free. She relieved so much stress. I highly recommend them.
Kelley Roberts
1709243575
David Sklar & associates is the place to be if you’re looking for help on your debt consolidation. Kudos on their staff Miss Grace Cuffaro who were very patient guiding me on complying all required documents.
Nhie GU
1709082686
Reduced my stress and gave me a second life. Sincere heartfelt thanks to the team.
Selvaraj Dhanagopal
1709061781
I am very pleased with the experience with your company. Great customer service and very professional. They made me feel like dealing with caring and friendly people. Jackie is a sweet lady. All of them very helpful.
Carolina Marroquin
1708815208
js_loader
DS david skalr icon

Book your free consultation.

Call 1-844-962-9200 or fill out the form below. We’ll do the rest.

Contact Us