The 411 on Consumer Proposals

Thursday, March 30, 2017 - 19:05

Consumer Proposals, Bankruptcy

Most, if not all people over the age of 18 have a pretty good idea of what bankruptcy is. If you don’t know someone who has personally filed bankruptcy, you have definitely heard of popular celebrities like Kim Basinger, Larry King, and Mike Tyson filing bankruptcy. Celebrities who have gone bankrupt aren’t the only bankruptcy new-makers. Worldwide retailers such as Blockbuster, BCBG Max Azria, and most recently HMV, have also made bankruptcy headlines.

So, it’s understandable that people are familiar with bankruptcy.

The term “consumer proposal” on the other hand, isn’t as much of a household name. A consumer proposal is a formal debt settlement option legislated under the Bankruptcy and Insolvency Act and filed with a licensed insolvency trustee.

A consumer proposal:

  • Prevents creditor action including collection activity and wage garnishments;
  • Stops all interest charges; and
  • Allows you to compromise (pay a portion acceptable to your creditors and yourself) your total debt

Consumer proposal is different than personal bankruptcy because:

  • It is a debt settlement option that allows you to compromise your personal debts;
  • You make affordable monthly payments to a maximum of 60 months;
  • Pay back a percentage, acceptable to your creditors and yourself, of your personal debt; and
  • Results in a R7 credit rating which remains on your credit report for 3 years after your consumer proposal is paid in full

It is the right option if you:

  • Have a consistent source of income;
  • Are able to make monthly payments; and
  • Are not able to make the required monthly payments on current debts

Advantages to you if you choose a consumer proposal:

  • Avoid bankruptcy;
  • Consolidate debt payments into one monthly payment;
  • Compromise the amount you owe;
  • Make personal budgeting easier;
  • Protect assets from creditors; and
  • Does not require you to submit monthly income reports

If you are in debt, but don't want to file bankruptcy, consider making a consumer proposal. Book a free, no-obligation consultation with us to discuss your options and see if a consumer proposal is right for you!

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