Why Should Homeowners Mull Over Submitting a Consumer Proposal?
Homeownership comes with its own set of challenges, especially when you’re grappling with debt. In such a predicament, filing a consumer proposal could emerge as a viable solution. This article delves into the reasons why considering a consumer proposal could be a good move for homeowners.
The Basics of a Consumer Proposal
Before we jump into the specifics, let’s understand what a consumer proposal entails. Essentially, it’s a formal agreement you forge with your creditors to repay a portion of your debt. It’s regulated by the federal government and administered by a Licensed Insolvency Trustee (LIT).
A Consumer Proposal is not synonymous with bankruptcy.
It doesn't involve surrendering your assets, which makes it a tempting proposition for
homeowners.
Why is a Consumer Proposal a Good Idea?
Now, we navigate to the main question – Why should homeowners consider filing a consumer proposal? Here are some compelling reasons:
Retention of Home Equity
When you file a consumer proposal, the equity in your home remains untouched. Unlike bankruptcy, where your home’s equity becomes part of your bankrupt estate, a consumer proposal allows you to maintain ownership.
Note: Home equity refers to the portion of your property that you truly ‘own.’ It’s the difference between your home’s fair market value and the outstanding balance of all liens on your property.
A Win-Win Situation for Debtor & Creditor
Through a consumer proposal, you’re essentially telling your creditors – “Let me keep my home, and I’ll repay you through my proposal.” This arrangement works well for both parties. As a debtor, you retain your home, while your creditors receive regular payments. This amount is typically higher than what they would’ve received if you had filed for bankruptcy.
Avoidance of Bankruptcy
Bankruptcy can have severe repercussions, including damaging credit scores and potential loss of assets. A consumer proposal can help you avoid these, ensuring that your financial future remains secure.
Discussing Your Options with a Licensed Trustee
If you’re overwhelmed by debt and considering your options, it’s wise to consult with a Licensed Trustee in Bankruptcy. They can provide valuable advice tailored to your situation, helping you make an informed decision.
Wrap Up
So, is filing a consumer proposal a good idea if you own your home? The answer is an unequivocal ‘yes.’ It enables you to hold onto your home, avoid bankruptcy, and offer a fair deal to your creditors. But remember, it’s crucial to seek professional advice before making any decision.
