Vaughan, ON Consumer Proposal Services
Dealing with debt is never easy, particularly if your financial burdens are spiralling out of control. Fortunately, consumer proposals in Vaughan provide a simple and straightforward way to reduce your finances. If your total debts amount to less than $250,000 (excluding a mortgage on your home), read on to find out if filing a consumer proposal is the right course of action for you…
What is a Consumer Proposal?
A consumer proposal starts as a formal offer to your creditors. Based on your income, essential expenditure and debts, you’ll offer to pay back a reduced amount of your debts. If your proposal is accepted, a consumer proposal becomes a binding agreement that you must uphold. Defaulting on a consumer proposal simply means that your debts will be reinstated, so it’s vital that you fulfil your obligations in accordance with the proposal.
Typically, individuals are required to pay a set amount towards repayment of their debts each month. The amount you pay will be dependent on your unique financial circumstances, so it won’t be unaffordable. In addition to this, individuals are generally required to attend at least two credit counselling sessions. These are designed to help you learn more about managing your finances and can help you avoid getting into debt in the future.
Consumer proposals can run for a maximum of five years, but you may be able to repay your reduced debt more quickly than this, depending on what your monthly payments are. Although a consumer proposal usually remains on your credit file for three years after it has been finalised, you can begin rebuilding your credit rating during this time.
What are the Advantages of Consumer Proposals in Vaughan?
Before deciding whether or not a consumer proposal is right for you, it’s important to consider the advantages and disadvantages associated with this form of debt resolution. Common benefits of making a consumer proposal include:
Reduce your debts
Instead of being required to pay back your debts in full, a consumer proposal significantly reduces the amount you’re liable for. Generally, you can reduce your total debts by around 70-80% when you file a consumer proposal.
Stop collections activity
Once you file a consumer proposal, your creditors can no longer engage in collections activity. This means that demands for payment, calls or potential legal action must cease.
Make one monthly payment
If you have multiple creditors, simply keeping on top of when each debt should be paid can be challenging. When you file a consumer proposal, you won’t be required to pay each creditor individually. Instead, you will make one, single monthly payment that will be distributed to your creditors on your behalf.
Prevent wage garnishments
A consumer proposal will prevent funds from being taken from your wages and being redirected to your creditors. If your wages are already being garnished, this will stop once you have filed your consumer proposal.
Keep your assets
If you file for bankruptcy, you will need to transfer ownership of non-exempt assets to your licensed insolvency trustee. Often, they will be seized and used to pay back creditors some or all of what they are owed. In contrast, filing a consumer proposal means you retain all of your assets.
Avoid paying interest
Once a consumer proposal is in force, creditors are not permitted to add interest to your accounts. This means your total debt won’t increase while you are making payments and the proposal is in force.
Retain professional freedom
Filing for bankruptcy prevents you from acting as a company director, which could restrict your ability to work or generate income. By making a consumer proposal instead, you can retain your professional freedom and ensure your career is unaffected.
Are There Any Disadvantages to Consumer Proposals?
A consumer proposal is listed on your credit file, so it’s unlikely you’ll be able to obtain credit while it’s in place. Generally, it will remain on your file for three years once you’ve completed the proposal, but you can begin to rebuild your credit rating during this time.
Despite this, consumer proposals in Vaughan overcome many of the disadvantages associated with bankruptcies, which makes them a viable debt resolution option for many people.
Talk to A Licensed Insolvency Trustee Today
To learn more about making a consumer proposal or to find out more about debt solutions in general, talk to a licensed insolvency trustee now. Call Bankruptcy Canada at (877) 879-4770 and start living a debt-free lifestyle now.
To learn more about how our Consumer Proposal Administrators can help you solve your debt problems, book your free evaluation meeting with our friendly North York / Vaughan, Ontario debt professionals.