If your creditors are pushing you for payments you can’t make but you don’t want to file bankruptcy, you may want to consider filing a consumer proposal. There are many benefits to a consumer proposal, and it may be just what you need to get your finances back on track.
What is a consumer proposal?
A consumer proposal is a proposal that you and your licensed insolvency trustee draw up and present to your creditors. The proposal may include a request to reduce the amount you owe, increase the time you have to pay, or eliminate your fees and charges. Your proposal can contain any or all of these options as long as you can pay off all of proposed debts in a maximum of five years.
The proposal is then forwarded to your creditors. Then, they decide whether or not to approve your offer. Most creditors prefer a consumer proposal over a bankruptcy because they will get back more of what is owed them.
What are the benefits of a consumer proposal?
A consumer proposal has a number of benefits that make it a good option for people who can’t afford to pay back their debts but don’t want to file bankruptcy. A few of the advantages include:
- A consumer proposal lets you keep your assets. Unlike a bankruptcy, a consumer proposal allows you to keep your possessions–you won’t lose your home, cars, or other assets. The amount you pay back and how much your monthly payment will be is decided during the process of drafting your consumer proposal.
- It stops collection activity. One of the most stressful things about owing money is the frequent calls from creditors. Once you file a consumer proposal, all collection activity against you stops. This is the law. This includes phone calls, letters, wage garnishment, and so forth. As long as you are making your monthly payments as you agreed to in your proposal, your proposal will remain in effect and the people you owe money to cannot contact you.
- It lets you pay back some of your debts. A consumer proposal provides a way for you to pay back a portion of your debts rather than having them discharged altogether.
- It doesn’t require that you report your income. In a bankruptcy, you must report your income and make payments if your income exceeds a certain amount. With a consumer proposal, you don’t have to do this. Your income could increase and it would not affect the agreed upon monthly amount.
- It provides flexibility. At the same time, you do have the flexibility to pay off your proposal sooner if you can if your circumstances change. This also results in a shorter amount of time the proposal stays on your credit report.
If your debts have overwhelmed your budget, a consumer proposal can be an excellent option for getting your finances back on track. licensed insolvency trustee can help you discuss the benefits of a consumer proposal and determine whether or not it’s a good option for you.