Consumer Proposals in Edmonton
Although consumer debt is steadily increasing across the country, residents in towns and cities across Alberta are amongst the hardest hit.
Furthermore, the number of delinquencies or debt defaults rose by 13.3% in just 12 months in the province.
For many people, spiralling debt means their finances soon become completely unmanageable.
Rising interest rates can make it difficult to keep up with repayments, while a drop in income can prevent you from paying all but the most essential bills. As a result, an increasing number of people are exploring debt solutions.
From credit counselling to debt management plans, there are a variety of different options when it comes to resetting your finances.
However, consumer proposals in Edmonton are a particularly effective way of escaping significant debt problems.
Often used as a way to avoid filing for bankruptcy, a consumer proposal could be the best way for you to take control of your financial situation.
What is a Consumer Proposal?
A consumer proposal enables you to reduce the amount you owe and make repayments over a specific period of time.
Generally, consumer proposals can only run for a maximum of five years, so you can be confident that solving your debt problems won’t take longer than this.
Perhaps most important is the amount your debts can be reduced by when you file a consumer proposal.
Generally, your overall debt can be reduced by approximately 70%, so there is plenty of scope to drastically minimize your liabilities.
However, a consumer proposal should never be entered into lightly.
Governed by the Bankruptcy and Insolvency Act, it is a formal procedure and one which will have a long-term effect on your credit rating.
Although a consumer proposal won’t affect your professional standing in the same way a bankruptcy can, it will have a significant impact on your ability to obtain credit in the short to mid-term.
Of course, most people who are considering making a consumer proposal already have fairly damaged credit ratings.
If you’ve missed numerous payments or have made unauthorized reduced payments to creditors, this will be recorded on your credit file and your rating will be impacted.
Although consumer proposals do restrict your ability to access credit, there are ways you can rebuild your credit rating following a consumer proposal.
Is a Consumer Proposal Better Than Bankruptcy?
Consumer proposals and bankruptcies are two different things and one is not necessarily better than the other.
However, a consumer proposal or bankruptcy might be better suited to your personal needs.
If you own a lot of assets and you want to retain ownership of them, for example, a consumer proposal may be the most sensible option.
If you file for bankruptcy, these assets could be seized and sold to pay your creditors.
With consumer proposals in Edmonton, however, you retain ownership of your assets at all times.
Conversely, a consumer proposal doesn’t eradicate all of your debt.
Instead, it simply reduces it.
As consumer proposals can run for a period of five years, you may find that bankruptcy is a quicker way to overcome your debt problems.
However, bankruptcies must stay on your credit file for a minimum of six or seven years once you’ve been discharged, depending on your location.
As a bankruptcy will continue to impact your ability to access credit, the fact that the proceedings can be concluded more quickly may not necessarily be as advantageous as you think.
How Much Will You Pay Each Month?
If your consumer proposal goes ahead, you will pay a set amount to the court each month.
This payment is then distributed amongst your creditors, in accordance with the agreed terms of the proposal.
As your proposal will be unique and based on your own individual circumstances, there is no set amount that everyone is required to pay.
Instead, your licensed trustee will work with you to assess your income and your financial obligations.
Based on these factors, a specific amount will be suggested and, if accepted, you will be required to pay this every month.
Contact Bankruptcy Canada Now
Understanding the numerous debt solutions that are available can be difficult.
If you think consumer proposals in Edmonton could be the right choice for you, why not speak to a licensed insolvency trustee today?
At Bankruptcy Canada, we’ve been helping people take control of their financial futures since 1999.