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?

The best decision I've made was to contact David Sklar & Associates, they are experts in this matters and also have dedicated Licensed Counsellors that provide the best customer support, like Rhoda Lewis, who I highly recommend. She worked tirelessly on my case, explaining ever detail to me willingly. She demonstrates a true interest in her clients. I appreciate how she patiently walked me through what to do, step by step. I now have control over my finances, as a result my life is much more peaceful and I can focus on what matters. Thank you!
Nilda H.
20:18 16 Jun 22
Very helpful and friendly! I am more than satisfied with my experience here. And more than happy with the outcome! Would definitely recommend .
Peggy Bulger
15:10 14 Jun 22
Jerry at David SKLAR helped me thoroughly understand my options and made me feel at ease. If you are looking at this type of service/help, I 100% recommend you give them a call.
Colleen H
12:50 14 Jun 22
Rhoda is a wonderful person, She help me and guided me throughout the process. I couldn’t do it without her support and expertise. Now I can start fresh and full of hope of a better life ahead of me.
ariezel erandio
21:33 06 Jun 22
The service I recieved from David Sklar and Associates was great. I was able to meet with Christin Sylver. She is kind, understanding and, professional. She was able to answer all the quesions that I had regarding my debt. At the end of our meetings, I felt that there is a heavy burden lifted from my shoulders. I recommend Chistine to anyone who is looking into debt relief.
Aliya H
12:11 04 Jun 22
Jerry is a very patient person, he answered all my questions and made this experience so smooth and easy for me. I was not sure what to expect but dealing with him made me feel so much better. He sure knows what he is doing and how to put people at ease for sure (should have done this long ago). I recommend him to anyone I am so glad I had him on my side and now to do my part. Thanks Jerry ur greatPattie
Patty Murphy
21:34 18 May 22
Rhoda Lewis helped me achieve a fresh start two and half years ago! She was very professional with a very warm, caring personality! I emailed her today with a question and she responded quickly. She's great at her chosen profession!!
Debbie Livingston
01:24 11 May 22
Nothing but good things to say about Jackie. She was so nice and so understand and everything was so quick and easy. In a matter of a week, there was the solution that I never thought was possible. Thank you so very much for everything that you have done. ❤️❤️❤️
Cassandra Keenan
21:05 10 May 22
I was in a lot of debt and stress, Jackie Stanley with David Sklar & Associates was very professional, and extremely helpful with getting out of debt. I should of did this sooner, they take the all the weight and stress of a persons shoulders, amazing team at David Sklar & Associates!!
Hubert Z
03:08 10 May 22
Jackie helped me out during a really tough time and she made the entire process very easy and painless. I highly recommend reaching out to her if you find yourself in any financial trouble. You won’t be disappointed!
prettylush 13
02:42 10 May 22
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