A Happily Ever After: The Tale of Your Consumer Proposal Journey
A consumer proposal can be a daunting, complex process. But with the right guidance and understanding, it can be a transformative experience towards financial freedom. Let’s explore a scenario where a couple navigates their consumer proposal journey, achieving their fairy tale ending.
The Setting
Imagine a family consisting of two adults working in lucrative, professional fields, drawing an annual household income of about $120,000, or around $10,000 monthly. Despite their substantial income, the family finds it challenging to save money.
The Challenge
Two significant expenses contribute to their financial strain: their monthly rent of $2,500 and the cost of financing two new vehicles, which equates to approximately $1,516.66 monthly. These vehicles were a gratification for the couple’s hard work and dedication towards getting their professional qualifications.
However, the family carries a substantial debt load of about $100,000 in unsecured loans, which include credit cards and lines of credit. This debt was accrued during a period when one spouse had to take a break from work for professional development, leading to a decrease in household income. Consequently, credit facilities were used to manage the monthly household expenses. Despite their best efforts, the couple couldn’t make substantial payments towards their debt, leaving the outstanding balances constant.
The Dream
The couple harbors a dream of owning a home someday. However, they realize that their current financial situation makes saving for a down payment nearly impossible. They also understand that being eligible for a mortgage is quite challenging given their debt and lack of down payment funds. The couple considers a consolidation loan from a bank, but the monthly payments of about $2,100 over five years seem unaffordable.
The Beacon of Hope
While searching for solutions online, the couple stumbles upon Licensed Insolvency Trustee (LIT) services. Even though they find the concept of a consumer proposal or bankruptcy intimidating, the free, confidential, and no-obligation initial consultation encourages them to schedule an appointment with Bankruptcy Canada.
During the meeting, the LIT patiently listens to the couple’s financial predicament, asking relevant questions to understand their situation fully. The trustee then explains the various options available to them, including continuing their current approach, considering a consolidation loan, filing a consumer proposal, or declaring bankruptcy.
The Proposal
Given the couple’s circumstances, the LIT suggests that a consumer proposal could be the most effective way to manage their debt. The proposed terms include monthly payments of $1,000 for 60 months, totaling $60,000. This proposition seems fair to both parties: the couple can afford the monthly payments, and the creditors receive more funds than they would in a hypothetical bankruptcy scenario.
Despite the appeal of this plan, the couple hesitates due to concerns about their credit history. The LIT provides them with a handy booklet published by the Office of the Superintendent of Bankruptcy and contact information for a Mortgage Brokerage to help them understand the potential impact on their credit profile.
The Deliberation
The couple weighs the pros and cons of the consumer proposal. The fixed, affordable, and interest-free monthly payments contrast with the potential impact on their credit history and limited access to credit facilities during the proposal. They decide to hold off on their decision, hoping for other possible solutions.
The Revelation
As months pass, the couple realizes that despite their best efforts, their debt isn’t decreasing. The frustration grows as they consider the potential benefits of the consumer proposal, which could have put their payments towards a meaningful purpose. After much deliberation, they decide to proceed with the consumer proposal at Bankruptcy Canada.
The Agreement
During the signing appointment, the LIT explains the requisites for successfully completing the consumer proposal. The proposal is accepted by the creditors and approved by the court, providing the couple with much-needed relief.
The Learning Curve
As part of the consumer proposal, the couple participates in two mandatory credit counselling sessions. They learn about tracking expenses and budgeting, setting financial goals, and understanding credit scores. They apply this knowledge to manage their finances better, even teaching their children about good financial habits.
The Fairy Tale Ending
With consistent payments and an emergency fund in place, the couple makes good progress on their consumer proposal. They start dreaming of owning a home again, knowing they’ll soon be debt-free and able to rebuild their credit records.
Just like this couple, you too can navigate your way out of debt and towards your dreams. Working with an LIT can play a pivotal role in your journey, leading you to your own “happily ever after”. Remember, the journey of your consumer proposal can indeed have a fairy tale ending.
