Filing for a consumer proposal is a legal process, done through a bankruptcy trustee. It will provide an insolvent person with a number of meaningful advantages and protections that are much more effective than any kind of credit counselling arrangement or informal payment plan agreed to by one or more of your creditors.
Informal agreements or credit counselling plans have no real legal backing. Acceptance by your creditors is purely voluntary and each and every one of your creditors can either choose to be a part of it or not. They can never be forced to accept the plan.
Here are the top seven advantages of filing a consumer proposal:
Your consumer proposal is legally binding on all of your unsecured creditors as long as you obtain acceptance of just 51% by dollar value of the claims filed.
As soon as you file a proposal, all creditor actions, court proceedings and wage garnishees will stop.
You will be immediately protected against lease terminations, loan accelerations and public utility shutoffs. A landlord cannot terminate your tenancy for non-payment of rent owing prior to the proposal.
All income tax debts are included in the proposal and they will be extinguished along with all other unsecured debts at the completion of the proposal.
The terms of the proposal can be very flexible. The proposal can be structured to give allowance for expected periods of seasonal or lower income or, conversely, for anticipated lump sum amounts you may expect to receive in future.
Your proposal can include large anticipated debts that have not yet been fully determined. For example, an expected shortfall on a real estate foreclosure that may take many months to be fully determined.
Your consumer proposal does not guarantee a bankruptcy if it is not accepted by creditors or if you default on the payments. In fact, the proposal can be withdrawn by you within at least the first 60 days after filing it.
In conclusion, a consumer proposal filed with a licensed insolvency trustee is simply a better and far more effective option to dealing with your debts.
If you are wondering if a consumer proposal is right for you, contact our office today. We’re here to help.