In the realm of debt management, a consumer proposal stands as a viable alternative to bankruptcy. It is a legal procedure supervised by a Licensed Insolvency Trustee (LIT) that allows you to renegotiate your debts with your creditors. But a question often arises – how many times can I do a proposal? This comprehensive guide will answer that question and more.
What is a Consumer Proposal?
A consumer proposal is a formal, legally binding process that is administered by a Licensed Insolvency Trustee (LIT). It is a negotiated settlement between you and your creditors that allows you to repay only a part of your debts, extending the repayment period, or both.
Advantages of a Consumer Debt Proposal
Consumer proposals come with a range of benefits. Firstly, all actions from creditors, including collection calls and interest charges, are halted. This provides immediate relief from the stress of debt. Secondly, you are allowed to make manageable payments for up to five years, rather than adhering to the demands of your creditors. Lastly, a consumer debt proposal stays on your credit report for three years after completion, which is half the duration of a bankruptcy.
Limitations on Proposals
While consumer proposals have many advantages, they also carry some limitations. For example, you cannot initiate more than one consumer proposal at a time. If you have not completed your current proposal and require assistance with new debts, you will need to complete the first one before initiating a new one.
How Many Times Can I Do a Consumer Proposal?
In theory, there is no limit to the number of times you can file a consumer debt proposal. However, the success of each proposal depends on the acceptance of your creditors. It’s important to understand that filing multiple consumer proposals can have a negative impact on your credit score.
Does a Second Proposal Cost More?
No, there is no additional fee for filing a second or subsequent consumer proposal. The cost is always based on your ability to pay, regardless of how many times you have previously submitted a proposal.
What Happens if My Proposal is Annulled?
If your debt proposal is annulled, which can occur if you miss three payments, a second consumer proposal will not be possible. In this case, you will need to either revive the debt proposal within 30 days, seek court intervention, or consider filing bankruptcy.
Conclusion
While it is indeed possible to file more than one proposal, it should not be seen as an easy way out of debt. Each proposal has serious implications for your credit and your financial future. Therefore, it’s important to consult with a Licensed Insolvency Trustee or a financial advisor to understand all of your options before deciding.
