A Consumer Proposal Provides Much Needed Debt Relief For New Parents

A Consumer Proposal: Offering Vital Debt Relief to New Parents

The current economic climate presents unique challenges to millennial parents. With housing costs on the rise, stagnant wages, and the advent of the gig economy, many young families grapple with financial pressures. This struggle intensifies when the family expands, and parents have to manage the additional financial strain of parental leave. But, there’s a beacon of hope – a consumer proposal provides much needed debt relief for new parents.

Unveiling the Financial Realities of Millennial Parents

Let’s delve into the story of a young couple, referred to as John and Mary for the purpose of anonymity. After the birth of their second child, they found themselves under significant financial stress, barely making ends meet on a single, sporadic income.

John, a laborer, only managed to secure contract work – a scenario increasingly common with the rise of the gig economy. Mary, on the other hand, was on her second maternity leave, receiving a fraction of her usual income due to her limited work period before childbirth. Their financial strain was further exacerbated by the subsequent obligations of two consecutive maternity leaves.

The Dark Side of the Gig Economy

The gig economy, while providing flexibility, is often marred by financial instability. Non-standard workers now make up 30 per cent of Canada’s workforce. A report from the Bank of Canada suggests that most people engage in unstable employment out of necessity, not choice. This precariousness can lead to physical and mental distress, as workers often overwork during busy periods to compensate for quieter ones, creating a constant state of insecurity.

Unveiling the Debt Problem

When John and Mary turned to BankruptcyCanada for assistance, they were burdened by substantial debt. They owed approximately $95,000 across four different creditors, accumulated through lines of credit and credit cards. Despite being up-to-date on all their bills, they were barely managing the minimum payments on their credit cards and lines of credit, leaving no scope for savings or planning for their children’s future.

Exploring Debt Relief Options

John and Mary initially considered a consolidation loan, hoping it would simplify their financial obligations and reduce their interest charges. However, they were hesitant to file for bankruptcy and were unfamiliar with the concept of a consumer proposal. They decided to consult with a Licensed Insolvency Trustee (LIT) to explore their options.

Initial Consultation & Opting for a Consumer Proposal

During their initial consultation with Nancy at the St. John’s office, it was evident that John and Mary were struggling with financial stress. Nancy introduced them to the concept of a consumer proposal, a debt solution they could afford, which significantly eased their worries.

 

Consumer Proposal: A Lifeline for Debt Relief

A consumer proposal is a popular alternative to bankruptcy that allows individuals to retain their assets while significantly reducing their debts. In John and Mary’s case, their agreement involved paying 46 cents on the dollar of what they owed over a period of five years. This not only reduced their unsecured debt load by more than half but also allowed them to retain their home and vehicle.

The Impact of a Consumer Proposal

John and Mary’s debt repayment schedule was streamlined into a single monthly payment made to their LIT, freeing up $500 in their monthly budget. Despite the consumer proposal affecting their credit score, they manage a secured credit card with a small balance, which helps expedite their credit recovery.

The Takeaway

Financial stress is common among new parents, but help is available. John and Mary did the right thing by seeking help from an LIT before missing any payments, allowing them to secure a consumer proposal, avoid bankruptcy, and minimize the impact on their credit.

Licensed Insolvency Trustees can help you find a solution that fits your situation, whether your debt problem seems insurmountable or you’re starting to worry about your debt load. A consumer proposal provides much needed debt relief for new parents and could be the lifeline you need to manage your finances and secure a stable future for your family.

Are you struggling with debt management? Learn more about your debt relief options by booking a free consultation with a Licensed Insolvency Trustee.

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