What Happens To Debt In A Consumer Proposal?
A consumer proposal is an offer to your creditors that you propose.
The offer is the amount of debt that you can afford to repay without putting too much pressure on your personal situation.
Since this is an offer it can either be rejected or accepted by the creditors.
Assuming it is accepted the amount of debt that you owe can change drastically.
Indeed, a significant percentage of the debt will be wiped away completely.
A consumer proposal isn’t the only option available, but it does provide a significant advantage.
The main aim is to reduce the overall debt and therefore ensure that it can be paid off more rapidly, speeding up the road to relief.
Does The Debt Still Exist?
One of the most common questions that people want answered is whether or not the debt still exists in a consumer proposal.
The simple answer is yes, the debt does still exist with the creditor.
When you make the proposal, you are offering to pay your creditor a certain percentage of what you owe them, over a certain amount of time.
The amount of time specified has to be within a 5-year timeframe, so keep this in mind when you are making the proposal.
The debt will still exist until the terms of the proposal have been fulfilled or if it gets canceled.
The good thing about this is that the creditor will not come after you for the debt, as they will receive the payments as specified in the proposal from the proposal administrator.
It is for this reason that you need to be careful about adhering to the proposal.
If you don’t complete the payments as you agreed, then you are still going to be responsible for the debt that you incurred.
Straying from the proposal in the first instance will show creditors that you are further untrustworthy.
Even when you are finished paying off the debt, if you file for a consumer proposal then it will stay on your record for a further three years.
After these three years, it is wiped from your record by the credit bureau.
Will A Co-Signer Be Protected?
You do need to be aware that co-borrowers or the co-signers are not protected if the consumer proposal has been filed by another individual.
The creditors will be provided with dividends payments.
But the account will continue to be active and continue to gain interest for the non-proposal account holder.
If you require further assistance on what to do about your debt or there any specific questions that you might want an answer to, then get in touch with us today.
There will be a friendly member of our team waiting to assist you and give you the debt advice that you need.