If you have a debt to pay and having a tough time paying it back, a consumer proposal can save you from bankruptcy. It allows you to negotiate fixed monthly payments or lump sum settlements over a set period of time with your lenders. Creditors may agree to write off some portion of your debt, and you only have to pay a portion of what is owed.
Therefore, filing a consumer proposal gives you legal protection as it is the government-approved debt settlement program in Canada. Consumer proposals provide more agreeable debt solution for both the debtors and the lenders.
Listed below are some valid reasons why you should consider filing a consumer proposal.
You Don’t Have to Give Up Your Assets:
A consumer proposal allows you to keep your possessions or assets – you will not have to give up your home, cars, or any other assets for loan settlements. The amount of debt you can pay back in monthly installments or lump sum repayments is negotiated and decided while drafting your consumer proposal.
Consolidate Your Debt into One Manageable Payment:
Your trustee managing your consumer proposal will handle your debt payments and deal with your creditors on your behalf. A consumer debt proposal enables you to consolidate your debt into one manageable payment that suits your financial position or income. You will not be stressed out to pay heavy debt repayments by cutting the costs of your other expenses. You don’t need to have a good credit score to consolidate your debt with a consumer proposal.
It allows Flexible Repayments:
A consumer proposal offers high flexibility in terms of debt repayment which means you can make your debt payments according to your financial circumstances so that the debt will not feel like a financial burden. You can also make an up-front lump-sum payment, or if your financial situation improves, you can also make larger repayments to your consumer proposal administrator in order to complete your proposal sooner.
Pay Back Only a Portion of Your Debt:
As a consumer proposal allows you to negotiate the terms of repayment, it also reduces the amount of debt you have to pay back to your creditors. That’s because a consumer proposal allows your creditors to recover more amount of debt than bankruptcy. If you go bankrupt, your assets will be used to repay your debt amount, which may not cover the cumulative debt. For this reason, your creditors agree to reduce your debt by 50 to 70 percent under the consumer proposal.
Interest will be Frozen:
The interest charges on your debt will be frozen, which means you no longer have to pay the accumulated interest charges on your debt amount. Moreover, the wage garnishments will also cease which involves deduction of a portion directly from your salary before it is paid to you.
Provides Legal Protection:
Filing a consumer proposal provides you legal protection as it will stop collection calls from creditors and wage garnishment through a court order. Therefore a consumer proposal will put an end to those harassing and stressful calls demanding debt payments that you cannot afford.