Unveiling the Advantages of a Consumer Proposal
In the financial world, the term ‘Consumer Proposal’ is not a stranger. It has become a common solution for individuals struggling with debts but reluctant to file for bankruptcy. Here, we’ll explore the Benefits of a Consumer Proposal in-depth, shedding light on its advantages and why it may be the right choice for you.
What is a Consumer Proposal?
A Consumer Proposal is a formal agreement made between you and your creditors. It’s facilitated by a Licensed Insolvency Trustee (LIT), who acts as an intermediary to negotiate terms that can help you pay off your debts in a manageable way.
# A simple definition of a Consumer Proposal
Consumer Proposal = Reduce debt + Extend time to pay + Eliminate fees and charges
This agreement can encompass various proposals such as reducing the total amount you owe, extending the payment period, or eliminating additional fees and charges.
The Role of a Licensed Insolvency Trustee (LIT)
LITs hold the exclusive authority in Canada to administrate Consumer Proposals and Bankruptcies. They are professionals who are licensed by the federal government. Some credit counselling agencies might offer informal proposals, but they lack the legal backing and don’t offer protection against your creditors.
Important: Consumer Proposals are binding on all your unsecured creditors once accepted.
Key Benefits of a Consumer Proposal
Understanding the benefits of a Consumer Proposal can help you decide if it’s the right debt solution for you. Here are the top advantages:
- Asset Retention: Unlike bankruptcy, a Consumer Proposal allows you to keep all your possessions, even those not considered essential. The value of these assets is factored into your repayment plan, but you won’t have to surrender them.
- Halts Collection Activity: Filing a Consumer Proposal puts a stop to all collection activities. This is a legal enforcement that includes an end to incessant phone calls, letters, wage garnishment, etc.
- Partial Debt Repayment: A Consumer Proposal lets you repay a portion of your debts, not the full amount. Once you’ve made all agreed payments, your entire debt is cleared.
- No Income Reporting: Unlike bankruptcy, where you need to report your income and expenses monthly, a Consumer Proposal requires only that you make your agreed monthly payments. Your income can increase or decrease without affecting the payment amount.
- Flexibility: A Consumer Proposal offers the flexibility to pay off your debts sooner if your financial situation improves.
A Consumer Proposal can be a lifeline if your debts have overwhelmed your finances. Talking to a Licensed Insolvency Trustee can help you explore all your options, including a Consumer Proposal.
Free Consultation
If you’re considering a Consumer Proposal, it’s beneficial to have a free consultation with a professional to discuss your options.
Conclusion
The Benefits of a Consumer Proposal are manifold. It offers an alternative to bankruptcy, allowing you to repay your debts in a manageable way while retaining your assets. However, it’s crucial to consult with a Licensed Insolvency Trustee to understand if it’s the best option for you.
Remember, financial problems can be overwhelming, but you’re not alone. Help is just a call or click away.
