What are the Benefits of Filing a Consumer Proposal?
If you have severe debt problems that you are having trouble managing with budgeting the benefits of a consumer proposal might cause you to want to consider a consumer proposal as there are many benefits of relieving your debt problems through a proposal agreement with your creditors.
A consumer proposal helps you regain control of your finances and a feeling of hope for the future because you see a way of out debt.
The benefits of a consumer proposal in Canada include:
• You can retake control of your financial future – By entering into a consumer proposal with your unsecured creditors you can be back in control of your financial situation and your future. With the weight of your debts gone and the threat of collection actions or wage garnishments lifted you will be able to breathe again and begin planning for a secure future;
• You will be able to consolidate your debts into one manageable payment – A consumer proposal allows you to consolidate your debts into one manageable payment. You will make the payment directly to your Trustee who will deal with all of your creditors on your behalf. Unlike a consolidation loan, you do not have to have good credit or be approved by the bank to consolidate your debt with a consumer proposal;
• You will receive flexibility on how you can repay your debt – Under a consumer proposal you can make a one time up-front lump sum payment if you have the available funds, structure the term of your proposal from 3 months up to 60 months, and if your situation changes you can make larger payments to your trustee (known as a consumer proposal administrator) to have your proposal completed sooner;
• Interest charges will be frozen – As soon as you file a proposal all interest charges on your debt will freeze and you will no longer accumulate more interest charges on your debt;
• You will be able to repay only a portion of your debt – Under a consumer proposal debt repayment plan you will be able to repay only a portion of your debt to your creditors. Generally, under a proposal plan, you will repay 30% to 50% of your total debt;
• You will be able to protect your assets – You will be able to keep all of your assets when making a consumer proposal to your creditors – even assets that would be lost in a bankruptcy. You will be able to keep your home, car, RRSPs, RESPs, and all other assets;
• You will be protected from legal action from your creditors – A consumer proposal will immediately stop your creditors and collection agencies from contacting you in any way or garnishing your wages through a legal order that is known as the “Stay of Proceedings.” A proposal will put an end to those harassing, aggressive and stressful phone calls demanding payments that you are unable to afford;
• The only payment you make is your monthly proposal payment – There are no hidden or extra fees when filing a consumer proposal. The fee that you agree to pay in your proposal is the only payment you make each month – your trustee’s fees and all other related expenses are included in the monthly proposal fee;
• You will be able to avoid bankruptcy – A consumer proposal gives you debt relief but allows you to avoid bankruptcy; a consumer proposal is a good alternative for people that would like to avoid bankruptcy or are unable to file bankruptcy (due to having large assets that would be lost in bankruptcy, for example.)
What are the Benefits of a Consumer Proposal For Me?
• You can learn more about your options and whether a consumer proposal would be right for you by speaking with a Trustee about your options. Find out if you would benefit from making a consumer proposal to your creditors by calling your local trustee office.