Is a consumer proposal right for me?
With so many debt relief options out there, deciding on the right one can be confusing. So, how do you decide if a consumer proposal is the right debt solution for you?
The good news is that you do not have to make this decision on your own. During your initial consultation, a BDO Licensed Insolvency Trustee will review your financial situation and explain every available option for eliminating your debt. A consumer proposal may be the best way to help you get out of debt if:
- You have outstanding debts greater than $1,000 but less than $250,000
- You’re looking to retain your house, car and other assets while repaying debt
- You’re having trouble making monthly payments and reducing the balance on your debt
- You’d like to have a timeline for becoming debt free
What are some of the benefits if I file a consumer proposal?
If you file a consumer proposal with a Licensed Insolvency Trustee, you will be able to:
1. Take control of your financial situation.
2. Repay just a portion of your debt.
3. Make one monthly payment.
4. Freeze all interest charges from the date you file your consumer proposal.
5. Prevent creditors from taking legal action and stop harassing phone calls.
6. Protect your car, house and retirement savings.
7. Repay your debts in three to five years.
8. Pay no additional fees.
Why would I consider a consumer proposal?
A consumer proposal allows you to pay off your debts without filing for bankruptcy, and it offers many protections and advantages over other debt relief plans. A consumer proposal and bankruptcy have one important advantage over other debt solutions: they are legally binding. Once the proposal or bankruptcy is accepted, you are protected by the courts and your creditors can’t take legal action against you. A consumer proposal will also allow you to pay back a portion of the debt you owe, as opposed to a Debt Management Plan (from a credit counselor) or a debt consolidation loan, which require you to repay your debts in full.
With that in mind, there are several key differences between a consumer proposal and bankruptcy. Here are a few things to consider when deciding which one is right for you:
When you file a consumer proposal…
- You must be able to repay a portion of your debts. Your total debt must not be greater than $250,000.
- You make the same monthly payment for the entire term of your proposal.
- You do not have to surrender any assets to your creditors.
- After your proposal has been filed, you do not need to submit any financial information or give your tax credits or refunds to your Trustee.
When you file for bankruptcy…
- There is no maximum limit and you will not be expected to repay your debts to your creditors.
- Your monthly payments to your Trustee are based on your monthly income; if you earn more money in a given month, you will be required to make a larger payment.
- Certain assets are protected in bankruptcy, however, you will need to surrender some assets to your Trustee.
- You will need to provide a monthly budget, including your pay stubs, to your Trustee.
- Any tax refunds or credits you receive must be given to your Trustee.