A consumer proposal is a legal document that is negotiated with your creditors by Consumer Proposal administrator. It is a great alternative to bankruptcy. How? Well, there are several benefits attached to consumer proposal.
The proposal is a legal binding that is put in place to provide you immediate protection from debt collectors. It also arranges for a partial repayment of your total unsecured debt owning. By filing a consumer proposal you agree to repay a certain amount of money what you owe. And the rest of the amount is forgiven by the creditors.
Outcomes After Filing Consumer Proposal
As you file a consumer proposal:
1. Garnishments cease immediately
2. Accumulation of interest stops there and then
3. No jeopardy of losing your home like bankruptcy
4. Calls from collection companies and creditors stop
5. You only pay a portion of debt owing within a repaying period of 5 years.
Why is Consumer Proposal is Better Than Bankruptcy?
The best important thing is consumer proposal is that ‘surplus income’ is not a consideration like bankruptcy.
The assets you have will not be surrendered similar to bankruptcy. Your assets will not be at risk once you propose the agreement.
Further, after filing the consumer proposal, your payments will not increase as your income increases. You will not owe anything more than the amount agreed upon the terms of your proposal. This means as your payment will not increase as your income increases.
The negative effect on the credit score is less severe as in bankruptcy. Usually, consumer proposal typically produces R7 rating whereas, from bankruptcy on gets R9 rating. Bankruptcy produces the lowest rating. Therefore, choosing bankruptcy is not a wise decision.
After filing a consumer proposal, you get the opportunity to repay some portion of the debt. As you get the sense of control, you get outstanding improvement in your self-esteem.
Why Creditors Accept Consumer Proposal?
Of course, most creditors do not want to go bankrupt. And, with consumer proposal, they get at least some amount rather than nothing at all. A consumer proposal offers them more than what they expect from bankruptcy.
Qualifications to File Consumer Proposal
The consumer proposal can be a viable solution if:
1. Your debts exceed $5000 but not more than $250,000
2. You can afford to repay a certain amount on regular basis
3. You cannot repay everyone with full interest
These are a few reasons why consumer proposal is the right solution for you. Unlike bankruptcy, it has several benefits because of which people choose consumer proposal. If you have a job that provides a steady income, consumer proposal is the right option for you.
