Consumer Proposals in Brantford
While Brantford, Ontario may be the birthplace of the telephone, it’s most household’s personal debts that are off the hook! Along with Alberta and British Columbia, Ontario accounts for 3 out of every 4 dollars in non-mortgage debt across Canada. And given that the average Canadian household owes over $20,000 (not including their mortgages), this paints an alarming picture of the state of our great nation’s finances.
If we let them, our debts can place a stranglehold on our household finances. They can make it virtually impossible to budget effectively or save responsibly. As such, when unforeseen expenses come along, households have no choice but to add even more to their debts. And when they are forced to resort to high-interest payday loans and cash advances on their credit cards, it can be a recipe for disaster.
When your debts feel like they’re spiralling out of control, you may assume that Bankruptcy is the only way out. But Consumer Proposals in Brantford can help you to get debt-free within 5 years without the long-term repercussions that come with Personal Bankruptcy.
Consumer Proposals: What are they, and how do they work?
In principle, Consumer Proposals in Brantford work in much the same way as a Debt Management Plan. However, it has a number of advantages that this kind of plan does not (as we’ll discuss shortly).
You cannot set up a Consumer Proposal on your own. You need a Licensed Insolvency Trustee (Click Here to find one near you) who can work with you to create a proposal to present to your creditors. To do this, they will look closely at your assets, your finances and your income to put together a plan that’s appealing to your creditors but manageable for you.
Best of all, your creditors don’t even have to agree to it unanimously. If a 51% majority of them accept the terms of the proposal, they will all be legally bound by it- whether they voted in favour or not. If you have non-mortgage debts that are over $10,000 but less than $200,000 this may be an excellent option to help you live debt-free.
Why choose a Consumer Proposal over Debt Consolidation?
Debt Consolidation is a viable and accessible form of debt relief to those with relatively small debts (below $10,000) and 1-3 creditors. Because commercial Debt Consolidation Loans have a favourable rate of interest (usually around 10%) they can prevent you wasting too much money on interest. They may even improve your credit score by paying off all your existing debts, and replacing them with a new one.
However, there are some debts (like government debts) that cannot be consolidated. Furthermore, because they are commercial loans, Debt Consolidation Loans may not be available to those with poor credit. Because they are designed to help you pay off your debts faster, you will likely find that your monthly instalments are larger.
A Consumer Proposal, on the other hand, eliminates all interest as well as putting a stop to any additional fees or charges. What’s more, unlike Debt Consolidation, it also allows you to reduce the principal (the amount you owe). In some cases it can be reduced by as much as 80%. So you can pay off your debts faster, without crippling monthly repayments. The best of both worlds.
Why choose a Consumer Proposal over a Debt Management Plan?
A Debt Management Plan is a voluntary agreement that your creditors enter into of their own free will. On the other hand, a Consumer Proposal is legally enforceable. Even if only 51% of your creditors agreed to it. While, of course, the same applies to you, the consequences are much the same as if you default on a Debt Management Plan.
A Consumer Proposal can be leveraged against debts like CRA debt and Student Loans (as long as they are over 7 years old). A Debt Management Plan cannot. What’s more, while a Debt Management plan can reduce or even waive interest, a Consumer Proposal not only eliminates interest, it also forgives up to 80% of your principal debt.
The only caveat is that a Consumer Proposal will stay on your credit report for 3 years after it has been settled, while a Debt Management Plan will remain for 2.
Why choose a Consumer Proposal over Bankruptcy?
Many assume that when you declare Personal Bankruptcy that all of your debts are automatically discharged. But in order to do this, a series of conditions need to be met to prevent your case from going to court.
What’s more, there are many assets that can be taken away from you to satisfy your creditors if you declare Bankruptcy. A Consumer Proposal can protect these assets. What’s more, a Bankruptcy can remain on your credit report for 6 years if it is your first and 14 years if it is your second.
To see a more detailed comparison between Consumer Proposals and Personal Bankruptcy, take a look at this article.
Still not sure?
A Consumer Proposal can be a highly effective way of eliminating wasteful spending on interest, making your debts more manageable, and living a debt-free life faster. Nonetheless, it is not for everybody. There are some, like those with smaller debts, fewer creditors and a credit rating worth keeping who may benefit more from Debt Consolidation. Likewise, there are some with more debt and fewer assets who may benefit more from Bankruptcy.
It’s all about finding the right debt relief solution for your unique circumstances.
That’s where we come in!
Since 1999, we’ve been helping people to assess all of their options, get in touch with a Licensed Insolvency Trustee and make an informed choice on the right solution for them. Want to know what we can do for you? Get in touch today on (877)879-4770 for a risk-free, zero-obligation and 100% confidential callback.