Do you find yourself struggling to make ends meet every month? Are you feeling overwhelmed by debt?
If you’re in Kitchener or Waterloo, a Consumer Proposal might be the right solution for you.
What is a Consumer Proposal?
A simple way to understand a Consumer Proposal is to think of it as a hybrid between debt settlement and loan consolidation.
In a Consumer Proposal, you:
- Settle the debt you owe your unsecured creditors for less than what you actually owe; and
- Consolidate your unsecured debts into one monthly payment.
Consumer proposals are legal agreements that can last for up to five years.
Will a Consumer Proposal actually get rid of my debt?
Yes, and this is one of the major advantages of a Consumer Proposal.
Assuming you make your monthly Consumer Proposal payments and meet all other obligations, you will finally be free of your unsecured debt within five years – or sooner.
Will a Consumer Proposal get rid of all my debt?
Consumer proposals cover unsecured debts only. This includes credit card debt, payday loans, CRA debts, and even certain student loans (those that are over seven years old).
What are the advantages of a Consumer Proposal?
Below are some of the reasons that many Waterloo and Kitchener residents seek out Consumer Proposals as a way to get freedom from their debt:
- Reduce your debt by as much as 70%.
It sounds too good to be true, but many debtors find that they only have to pay back 30% of what they actually owe their unsecured creditors. This makes their debt – once thought of us as totally impossible to repay – much more manageable.
- Keep your assets.
Including the equity in your home. Contrast this to bankruptcy, where you are only able to keep those assets that are included in the bankruptcy exemptions of your jurisdiction (such as a car under a certain dollar amount).
- Make only one monthly payment.
As we mentioned above, in a Consumer Proposal, you consolidate your unsecured debts. This helps you to focus on making just one monthly payment instead of having to remember which creditor to pay what, and when.
- Your monthly payment will be affordable.
It is calculated and proposed to your creditors based on your unique financial situation to ensure that you can actually afford it.
- Your monthly payment will be fixed.
Yet another benefit of a Consumer Proposal over bankruptcy is that in a proposal, even if you get a raise or a promotion – which means you’ve got more money coming in – your monthly payment stays the same. In a bankruptcy, you need to make extra payments into the bankruptcy if you have surplus income.
- Freeze the interest on your unsecured debts.
Once you file a proposal, the interest on your debts stops accumulating.
- Control how quickly you complete your proposal.
If you’re willing and able, you can make extra payments into your proposal so that it completes faster. You can then get started more quickly on repairing your credit.
- Bind your creditors
Including payday lenders and even the CRA. Because a proposal is a legal agreement, you are protected by law. These creditors cannot come after you if they change their mind down the road and want to recover the entire debt you owe.
- Stop wage garnishments and collection calls
And any other action that your unsecured creditors may have been able to take against you prior to filing.
Once you file a proposal, an automatic stay of proceedings takes effect. This simply means that your creditors need to give you time and breathing room to settle your financial affairs. They are not able to start or continue any enforcement action against you.
- No monthly reporting obligations.
In comparison to a bankruptcy, a proposal is easier and doesn’t require the monthly reporting that bankruptcy does.
- You don’t pay for your proposal.
The payment to your Licensed Insolvency Trustee – which is the only professional authorized by the federal government to assist Canadians with filing for insolvency – comes out of the monthly payment you pay your creditors. Your LIT is paid out of money that would have otherwise gone to your creditors.
- What’s the catch?
Clearly, any insolvency will have an impact on your credit score. However, in the long run, a Consumer Proposal will finally fix your debt issues and likely improve your credit score. Once you’ve gotten rid of your unsecured debt (in five years or sooner), you can work on rebuilding your credit to achieve your future financial goals.
Am I eligible for a Consumer Proposal?
A Consumer Proposal is not the right option for every debtor and only certain debtors quality. Requirements include:
- Owing debts that are greater than the value of assets you own.
- Being unable to pay your debts as they come due.
- Owing less than $250,000 (not including your mortgage) in unsecured debt.
- Being a resident of Canada or owning property in Canada. You don’t need to be a citizen.
- Being able to afford the repayment of at least a portion of what you owe your unsecured creditors.
How do I file a Consumer Proposal in Kitchener/Waterloo?
There’s only one way to get started: You need to contact a Licensed Insolvency Trustee (LIT).
LITs are the only professionals authorized by the Canadian government to assist debtors with filing for Consumer Proposals or bankruptcies.
Licensed Insolvency Trustees are:
- Federally licensed and regulated. They have the education and credentials to assist you properly.
- Required to abide by strict ethical regulations. As such, you can be assured they are working toward your best financial interest.
- Only a phone call away. And your initial consultation is free. At this initial consultation, your LIT will undertake a comprehensive review of your financial circumstances and advise you of all debt relief options available to you – as well as their pros and cons. Your LIT will even suggest which option they believe is the best one for you and your family.
- Able to assist you with the full range of debt relief options, from simple budgeting to bankruptcy. Think of an LIT as a one-stop-shop for all your financial needs. And remember, the sooner you get help, the more options you may have available to you to get freedom from your debt.
Contact a Licensed Insolvency Trustee Today
As seasoned Licensed Insolvency Trustees, Adamson & Associates Inc. want to see you succeed in your mission to becoming debt-free.
We treat people with dignity and respect, and you will never be judged. If you wish to speak to someone in Windsor who cares about your financial future, contact us at 519-310-JOHN (5646) and let us help you WITH THE ANSWERS YOU NEED.