Most people that come into our offices think that the only debt relief option we provide is bankruptcy. They are surprised when we offer other options, such as consumer proposals. Making a consumer proposal isn’t ideal for everyone, but if you want to avoid bankruptcy and you fit in the criteria, it’s an excellent option.

So, what is a Consumer Proposal?

In essence, a consumer proposal is a deal you make with your creditors to eliminate your debt.

Importantly, consumer proposals only cover a portion of your debt. By agreeing to the proposal, your creditors agree to waive the remaining balance. The amount you pay is generally based on both what you owe and your income.

For example, say you owe $30,000 total to three different creditors, and you can’t keep up with the payment. You have a steady income but you can’t meet the minimum payments on your debt.

Together, we would sit down and figure out exactly what you can afford to pay each month. This amount would be drafted into a consumer proposal and submitted to the creditors. If they agree, you will continue to pay that monthly amount until the terms of the consumer proposal are met, at which time the rest of the debt is eliminated.

Is a Consumer Proposal the best option for you?

While it might sound like a great option, consumer proposals aren’t for everybody. A consumer proposal might work for you if you: 

Have a consistent source of income

Are able to make monthly payments

Are not able to make the required monthly payments on current debts

Are trying to avoid claiming bankruptcy

If you still think it’s a viable option, then it is important to be aware of some of the disadvantages of submitting a consumer proposal: 

Consumer proposals are on the public record, and show up during credit checks

Creditors can reject your proposal, asking for a higher monthly payment

If you miss more than three payments, the consumer proposal is deemed to have been annulled

So, how do you make a Consumer Proposal?

If you are looking for somebody to talk to about insolvency issues, it is absolutely critical that you understand this one fact:

Only a Licensed Insolvency Trustee has the power to submit consumer proposals!

If you believe this is the option for you, skip a middle-man and go straight to a Licensed Insolvency Trustee, like Welker & Associates.

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