Consumer Proposals
Nobody wants to get themselves into debt, but sometimes it can happen to the best of us. There are several ways to go about sorting out debt, and the first rule is always not to panic. Take a deep breath and know when you’re looking for debt help in Canada or facing bankruptcy in Canada, it isn’t the end of the world.
Identifying Whether a Consumer Proposal is Right For You
Suppose you simply need to work to consolidate your debts into one payment and you’re still able to pay off your debts without any major issues. In that case, you may only need to consider debt consolidation and look at some specialized financing solutions that can help. This will help convert to one monthly payment and may even be lower overall if you can obtain a better rate.
If you’re finding yourself missing payments, drowning in debt, or borrowing new debt to pay off older debts, you may be looking at bankruptcy. That doesn’t have to be a scary word, and it is a lot better to come to terms with and seek debt help for it in Canada than have to face numerous creditors calling you, or worse, facing lawsuits from creditors and having to appear in court to defend them.
If you don’t take any action when it comes to this, then those lawsuits will become a reality, and there’s a strong chance that you’ll have your assets liquidated and taken to pay off as much of the debt that is possible. Staying ahead of the situation is your best option to protect your physical assets and overall mental health and wellbeing. This is where a consumer proposal comes into play.
What is a consumer proposal?
A consumer proposal is where you work with someone known as a Licensed Insolvency Trustee (LIT). This person ends up being your advocate who will work directly with all of your debtors to get the best deal for both sides. As a mediator, they will work to get you the debt help in Canada that you need and will also be fair with creditors so they don’t feel as if they’ll get nothing out of the deal.
There are many instances where your debt levels will end up being greatly reduced from what the original amounts were, especially with all those interest and fees that have been collected since. This is because your LIT is also calculating what you’re actually able to pay comfortably and consistently until the debts are fully cleared.
What are the requirements for submitting a consumer proposal?
First of all, you’ll need to owe at least $1,000 in debt but cannot owe more than $250,000. Otherwise, you won’t be eligible for this relief type. You’ll also have to go through a Licensed Insolvency Trustee and cannot do this on your own. There are also additional requirements per LIT, from counselling sessions to attending creditor meetings, if any are held.
When it comes to personal information, a list of all assets and liabilities, regardless of if they are in repayment disarray or not. Also, make sure always to note any changes of address or anything critical that the LIT may need.
What are the major benefits of a consumer proposal?
Where to start is a better question. Once you’re getting your consumer proposal approved, that means no more nagging debt collector phone calls. In addition, your overall debt, in the end, will be much lower, and you’ll only have to make one payment for all related and involved debts.
To continue with the list of benefits, your assets will no longer be in contention or taken away when the consumer proposal goes through. In addition, any existing lawsuits that have closed that have specialized debt solutions such as wage garnishment stop immediately, and this consumer proposal takes over. Finally, even the interest accrual that comes with debt can be stopped on the existing debt amounts to help with repayment.
What are some things to consider with a consumer proposal?
First of all, there’s no need to be shy, embarrassed or shocked. If the past several years have taught us anything, it’s that more and more Canadians are struggling with debt. So the fact there’s an option like this should be a blessing. You’ll need to keep with the payments, though, and there’s very little room to miss any, as this is already a negotiated settlement.
The other area to consider is that although you’re seeking debt help in Canada, it will affect your credit score during repayment. That will be extended to around three additional years after the payment schedule is complete, so if your repayment is seven years, then you’re looking at ten total years before your credit score will be healthy again. However, if your situation is already not good, your credit is likely not in a good place either and it is often the case that being in a Consumer Proposal will actually improve your credit score from where it was.
Whilst obtaining new debt and financing can be more difficult, that is kind of the point as you should be focused on handling the debt repayment outlined in the consumer proposal.
Some final areas to cover
Make sure to not get into another downward spiral of debt and only consume credit that you’re capable of handling. You can consider auto loans for a car to move around or other types of secured credit, where if you end up not able to pay, there’s collateral in place to cover it up. Stay away from high-rate loans such as payday loans, as those are predatory and will have interest rates so high that they’re difficult to repay.
If you’re looking for some debt help in Canada or considering bankruptcy in Canada, don’t do anything until you reach out to us here. At Canadian Debt Support, we’ll help to assess your overall situation and see if a consumer proposal or other options are the right ones to get you out of debt and into a less stressful lifestyle.
Don’t let the worry of debt or repayments consume your thoughts daily when there are plenty of options, strategies, and legal action you’re able to take that will help get you worry-free and debt-free.