Consumer Proposal vs Debt Settlement

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 and live in the Toronto area, call us at 416-498-9200 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. 

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Ready to live debt free?

I cannot emphasize enough how thankful I am for Jackie Stanley's help with filing for bankruptcy.All of us dread being put in this position and we have a million questions about the process but trust me Jackie makes it so easy for you that you don't have to do anything yourself!She is very kind and friendly and puts you at ease right away. She emphasizes with you and let's you know it's not your fault.Most importantly when you leave that first meeting you will not believe the load that is taken off your shoulders. You can actually feel it!You are a godsend Jackie and I can't thank you enough!!I hope you are highly valued there as much as you are by me!
Sue Murray
18:45 05 Dec 21
Putting together and executing a Consumer Proposal can be daunting, that is unless you work with Cori Naron at David Sklar & Associates Inc. Cori's advice and support has been instrumental over the past five years. Thank you Cori!!
Barry Kuntz
20:37 01 Dec 21
I’m very happy with the services I received for Jackie Stanley who helped me get my finances in order. It was a quick and easy process & all of my questions were answered.
Amanda Frappier
01:18 19 Nov 21
I have had the privilege of being supported by Jackie at David Sklar Associate. She was very helpful, very professional and very friendly. She gave me the help I need. Thank you Jackie for your help.
Alex Taylor
22:03 17 Nov 21
Got my probe solved, great service
arny raposo
17:02 11 Nov 21
Jackie at Daivid Sklar and Associates is such a pleasure to work with. She explained everything in great detail and is always there when I have a question or concern. She really cares about her clients.
Steve Medica
09:33 10 Nov 21
I filed a proposal with another group, which came in as a referral from one of my brokers. My experience went from ok to bad to worse, due to lack of communication and education on the process I was to embark on. I worked with Cori Naron in the past, and I came to her now for help on literally doing the work that the other group should have done. Cori stepped in, educated me, advised on rights, responsibilities, how the process works and what potential outcomes may happen. I do not have enough words of recognition and gratitude for what she did - she alleviated stress, anxiety, dead-end thoughts and she made me live again. Congrats to DSklar for hiring her and retaining such talent.
Giani Kokolakis
18:45 25 Oct 21
Very professional service. Before contacting David Sklar & Associates i contacted bunch of other firms they seemed fishy. After I spoke with Jason Sklar at Hamilton Office I discovered professionalism with hope. I was explained every step of my situation with solution professionally. Thank you David Sklar & Associates.
Wajay Awan
07:29 12 Oct 21
I met David a few months ago and i am glad I did. He has helped me all the way through my bankruptcy with good advice and explained every step of the process. David is a very down to earth and very professional. Anytime I've had a question I was able to reach out to David by phone or email and he always got back to me. If your struggling with your bills and need a way to get help, I strongly recommend David Sklar &Associates to help you. My experience with them on 1-5scale would be a 5;; My life is so much better now, thanks to David Sklar.
Bruce Locke
16:13 08 Oct 21
I have had the privilege of being supported by Jackie S, at David Sklar n Associate.She was helpful, professional and friendly. I was able to get the help I needed at a difficult time in my life. I would recommend anyone who needs support with working out their debts to ask for Jackie, she will be waiting to assist however she can to help you through your debts. She works with a team who is always ready and responsive.Thank you Jackie and your team:)
Denise Simpson
15:17 09 Sep 21
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