A consumer proposal is considered as one of the best alternatives to bankruptcy for its ultimate benefits. It is the only government approved debt settlement program. Because of this reason, today maximum of people is choosing it as their preferred debt relief solution.
If you file a consumer proposal, you will have several advantages. Such as,
- A negotiated debt settlement
- You will pay only a portion of your debt
- All payment will be made in installments in 5 months
- Interest is frozen when you file
- Legally binding for you and your creditor
Why Should You File a Consumer Proposal?
- You have consumer debt greater than $5,000 but less than $250,000
- You are able to repay a portion of your debts, but need more time than your creditors are offering
- You want to stop all interest charges, wage garnishments and threats of legal action
- You don’t want to lose your important assets due to your debt
5 Top Advantages of Consumer Proposal
Here 5 points that will clarify why consumer proposal is the best option for you.
Keep Your Assets Safe
One of the biggest advantages of a consumer proposal is that you are not going to lose your assets like in bankruptcy. All assets including tax refunds, investments, and equity in your home will be safe.
Avoid Surplus Income
Unlike bankruptcy where you pay extra if your income increases, consumer proposal includes a fixed payment that never increases.
Lower Monthly Payments
In this option, you negotiate to repay only a portion of your debt.
It is not abnormal to see debts reduced by as much as 60-70% of the real amount of debt. It is one of the best, and safest, debt consolidation options available. Once you file consumer proposal all interest stop which results in a significant saving over a debt consolidation loan.
Get Creditor Protection
As a legal process under the Bankruptcy & Insolvency Act, a consumer proposal provides creditor protection that stops threatening calls from your creditors.
Once your consumer proposal is permitted by the majority of your creditors, it binds all creditors and they can’t take any legal action against you.
Avoid Bankruptcy
Most of the creditors accept this proposal easily as they know it is a far better option than bankruptcy where they do not get much. If you offer your creditors more than they would receive in bankruptcy, they will certainly accept it.
How to File Consumer Proposal?
For filing a consumer proposal you need to take the help of a LIT (Legal Insolvency Trustee). LIT acts as a consumer proposal administrator and makes the things clear between you and your creditors.
Your trustee will prepare such plan that will decide how and when you will make the payments to your Creditor.
