When you’re insolvent and considering Consumer Proposals or Bankruptcy, one of the big questions you may have is how insolvency will change your life. What’s the process like, what’s it like renewing your mortgage, what happens to your credit card debt, and is it always successful? These questions get asked a lot, which is why we put together a glimpse into life during the Consumer Proposal process.
#1 Filing a Consumer Proposal in Toronto
Filing a Consumer Proposal in Toronto provides you with relief right away – when your Licensed Insolvency Trustee files your Consumer Proposal, your creditors have 45 days to object to your proposal or accept it. During those 45 days, unsecured creditors must stop charging interest, stop collection calls and legal actions, and stop their collection efforts, including wage garnishments. You also stop making payments to those unsecured creditors for those 45 days.
At David Sklar & Associates, we assist you with creating fair Consumer Proposals that are more likely to be accepted. Few Consumer Proposals are turned down if they offer unsecured creditors more money than they would receive in a bankruptcy. One of the benefits of a Consumer Proposal vs bankruptcy is that’s advantageous to all parties, but if a creditor objects, then all creditors must vote on it. If creditors to whom you owe more than 50% of your debt (in dollars) reject your proposal, you may be left with no choice but bankruptcy.
#2 Credit Card Relief
Consumer Proposals offer credit card relief by restructuring your debt and coming to a new agreement with your creditors to repay your debt. Within five years, you pay a portion of the debt you owe the credit card company. As Licensed Insolvency Trustees, at David Sklar & Associates we can help with your Consumer Proposal if you can’t pay your credit card debt and other unsecured debts.
#3 Defaulting on a Consumer Proposal in Toronto
Credit counselling is an important part of going through the Consumer Proposal process, and David Sklar & Associates offers it. Credit counselling teaches you about budgeting, cutting expenses, using credit wisely, and rebuilding your rating. It also keeps you on track to pay your Consumer Proposal, because defaulting can leave you in a tricky situation. The proposal can be annulled if you miss three months of payments, putting you right back where you started and potentially facing bankruptcy. It’s our job to create a Consumer Proposal that’s fair to you, and that you can reasonably pay off within the set timeframe.
#4 Mortgage Renewal in a Consumer Proposal
Many of our clients’ number one concern when they are insolvent is the fate of their home. A Consumer Proposal keeps your home off the table and puts you in a position where you can keep paying your mortgage, but clients often worry about dealing with a mortgage renewal while in a Consumer Proposal. If you’re worried about mortgage renewal during a Consumer Proposal, speak with us at David Sklar & Associates and we can help you prepare for a fair mortgage renewal. The good news is that if you make your payments on time and you can prove your ability to continue making payments, you should not have trouble at all.
A Consumer Proposal puts you on the path back to good financial health. Talk to a Licensed Insolvency Trustee and get the assistance you need to get out of debt the right way.