Consumer proposals are an alternative to bankruptcy that allows you to pay less than what is owed.
You make a proposal to your creditors and agree on an amount that you will pay back, and the rest of the debt is written off.
You will then pay the agreed upon amount in monthly instalments over a set period of up to five years.
Once the proposal is agreed, it is relatively straightforward, but many people wonder what will happen if they receive a lump sum payment for some reason.
If you receive a lump sum from an inheritance, a gift from a family member, or a court settlement, how does this affect your consumer proposal?
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If you are looking for consumer proposal help when expecting lump sum payments, we can advise you on how they will affect you.
When you receive a lump sum during an existing consumer proposal, it does not affect your monthly payments.
Many people are concerned that their monthly payments will be increased if they receive a lump sum, but that is not the case as the payments are fixed when the proposal is agreed.
Any additional money that you earn or receive is considered separate and is yours to keep.
However, if you do not already have a consumer proposal in place but you are considering one to deal with your debts, having a lump sum available gives you some options.
Consumer proposals are very flexible in terms of payment, and if you receive a lump sum that is not large enough to cover all of your debts, a consumer proposal is a great option.
Using A Lump Sum For An Extended Payment Plan
When you file for bankruptcy, you are required to hand over most of your assets to your trustee, who will use them to pay off your creditors.
While some assets are protected during bankruptcy, your lump sum will not be, which means that bankruptcy isn’t the right choice for a lot of people.
For example, if you were made redundant and you need your severance money to pay for your living expenses until you find a new job, bankruptcy isn’t really an option because you lose the lump sum.
But you can file for a consumer proposal instead, which allows you to keep the lump sum and agree on a monthly payment plan.
So, the lump sum can be spread over an extended payment plan, allowing you to cover your living expenses and also pay off the consumer proposal at the same time.
Paying An Upfront Consumer Proposal With A Lump Sum
Instead of an extended payment plan, you could use your lump sum to pay the consumer proposal upfront.
This means that you can clear all of your debts right away and then move forward with a clean slate.
The flexible nature of consumer proposals also allows you to pay part of the balance upfront and then pay the rest in monthly instalments.
If you need consumer proposal help when expecting lump sum payments, get in touch today and we can advise you on the best way to use your lump sum to pay down debts as quickly as possible while also maintaining financial stability.
You can reach us on the phone or fill out an evaluation form and we will get back to you.
Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
Consumer Proposal Eligibility
How to Amend a Consumer Proposal