If you’re looking into options you may have to help you with an overwhelming debt load, here are 10 benefits to a Consumer Proposal that may help you in your decision when considering all options.
- Debt Relief – Your unsecured debts such as credit cards, credit lines, loans, overdrafts, taxes are all included in a Consumer Proposal. Some exceptions apply to some unsecured debts such as support obligations, debts resulting from fraudulent activity, but for the most part, all typical unsecured debt is included.
- Consolidation – Instead of paying various debts at different times of the month, a Consumer Proposal consolidates all your debts into one payment.
- Budgeting – Your trustee will work with you to set a payment that fits within your budget making the payment easier to manage.
- Interest Relief – All interest charges on the debts included in the proposal stop on the day you file the proposal.
- Credit Repair – Do nothing with your debts will just drag out negative notes on your credit report. A note to say you filed and included the debt in a Consumer Proposal will stay on your credit report for just 3 years after you’ve completed the payments.
- Legal Protection – Other than bankruptcy, a consumer proposal is the only form of debt settlement in Canada that provides you with legal protection against your creditors to stop actions such as wage garnishments.
- Secured Debt Relief – Secured debts such as car loans, can be included into a Consumer Proposal, if you’re willing to surrender the asset to the creditor prior to filing the proposal. This often makes sense if you owe significantly more on the loan than the asset is worth and you want out of the deal.
- Asset control – Unlike a bankruptcy, you keep control over the assets you own and want to keep. You keep you tax refunds too.
- Time – You can offer a Consumer Proposal over a maximum of 5 years. This is often helpful if you’ve got creditors demanding lump sum payments immediately. A proposal allows you to stretch the payments over time and at a rate you can afford. Also, unlike unregulated debt settlement programs, the deal with the creditors is made at the start of the proposal, not at the end after you’ve attempted to save up money to make a deal, so you know at the start if the creditors are on board or not.
- Majority Rules – In a Consumer Proposal, you don’t necessarily need all your creditors to agree to the proposal in order for it to be binding on everyone. Each creditor will receive 1 vote for each $ you owe them. You need a 51% majority to vote in favor of the proposal for it to be binding on all creditors.
Furthermore, you may also want to avoid the stigma of filing for bankruptcy by offering your creditors a Consumer Proposal. Knowing that you’re making the best effort possible to repay some of what you borrowed is comforting to some as opposed to feeling like they’re giving up or walking away from the debt in a bankruptcy.
If you’d like more information on your debt options, or more details on how to file a Consumer Proposal, contact a consumer proposal administrator. All our administrators offer free consultations and would be happy to discuss your options with you after reviewing your details and would be happy to further explain the benefits a consumer proposal can provide.