Do you believe that bankruptcy is your only path to freedom from overwhelming debt? Bankruptcy does not have to be inevitable. Even when it seems like you’re facing financial ruin, you need to know that you have options. If you live in London, a consumer proposal may help you achieve the debt relief you seek.
What is a consumer proposal?
Put simply, a consumer proposal involves the negotiation of your unsecured debt by a Licensed Insolvency Trustee (LIT) on your behalf with your creditors to pay back less than you owe over a period of up to five years.
What types of debt does a consumer proposal cover?
A proposal eliminates most credit card debt, bank loans, payday loans, tax debts, and even certain student loan debt.
What are the benefits of a consumer proposal?
When you file a consumer proposal:
- You pay back significantly less than you currently owe. This can mean an up to 70% reduction in your unsecured debt.
- You stop incurring interest on your debt.
- You consolidate your debts into one affordable monthly payment.
- You get to keep your assets (your home, car, RRSPs, etc.).
- You put a stop to collection calls, lawsuits, wage garnishments, etc. Once you file a proposal, an automatic stay of proceedings takes effect. This stops your unsecured creditors from taking action against you to recover the debt.
- You legally bind your creditors. Those creditors included in the proposal can’t change their mind later on and pursue you for the debt.
- You can expect to be free of your unsecured debt within five years.
- You avoid bankruptcy.
Why is a consumer proposal a better alternative to bankruptcy?
Bankruptcy and consumer proposals are the only debt relief options that offer legal protection to debtors. They also both put an end to your unsecured debt if you carry out your obligations.
However, a consumer proposal is more advantageous. In a consumer proposal:
- You don’t need to surrender any assets. In a bankruptcy, you need to surrender those assets that do not meet the exemption exception in your jurisdiction. These will include most household belongings, and a car below a specific dollar amount.
- You pay a lower, more affordable, fixed monthly payment. In bankruptcy, the more you earn, the more you need to pay. That’s why bankruptcy can be costly.
- You keep windfalls, such as your tax refund. There is no monthly reporting requirement in a proposal, and you don’t have to advise your LIT of any changes in your income.
- In bankruptcy, however, you need to make a monthly reporting of your income and expenses and submit copies of your pay stubs to your LIT. Based on this information, you may be required to make surplus payments into your bankruptcy.
- You can rebuild your credit faster than you can in a bankruptcy. A proposal falls off your credit report three years after its completion, as opposed to bankruptcy which takes a minimum of 7 years after discharge.
Is a consumer proposal a final solution to my debt problems?
A consumer proposal gives you the fresh financial start you deserve. Once the proposal has been paid out and completed, typically in less than five years, you will be completely rid of all the debts included therein.
You are also required to attend two credit counselling sessions as part of the proposal. These sessions are intended to arm you with the knowledge and tools you need to help you avoid winding up in a financially dangerous position in the future.
Who qualifies for a consumer proposal?
- You may qualify for a London consumer proposal if:
- You a resident of Canada or have property in Canada;
- Your total debt is less than $250,000 (excluding a mortgage);
- You are insolvent (your debts are greater than the value of the assets that you own); and
- You can afford to repay at least a portion of your debts.
If I want to file a consumer proposal, what do I have to do?
The very first step to filing a proposal is to contact a Licensed Insolvency Trustee. These are the only professionals authorized by the Canadian government to assist debtors with bankruptcy or consumer proposals. Your LIT will negotiate the terms of your proposal based on your income, assets, and debts, and file the proposal if the majority of your creditors accept it.
What if I don’t want to file a consumer proposal but I still want relief from overwhelming debt?
Your best place to start on the path to freedom from debt is to contact an LIT. These federally regulated professionals can assist you with the entire range of debt relief options out there, from simple budgeting, debt settlement, and credit counselling to consumer proposals and personal or corporate bankruptcy.
LITs are widely considered the best financial advisors in Canada, and with good reason. LITs not only have the education and credentials to assist you properly, but they must abide by strict ethical rules and regulations. You can rest assured that the financial advice you receive is in your best interest.
And the sooner you reach out, the more options you may have available to you. Don’t wait until bankruptcy is your only option.
As seasoned Licensed Insolvency Trustees, Adamson & Associates Inc. want to see you succeed in your mission to becoming debt-free. At your free initial consultation, we will make a comprehensive review of your financial circumstances and advise you of every debt relief option available to you.
We will go over their pros and cons, and provide our expert advice on which may be the best option for you and your family.
You will not be pressured to make any choice on the spot. Rather, you will be given the knowledge to help you determine your next best course of action. You deserve to live free of burdensome debt, and it’s our mission to help you achieve this.
We treat people with dignity and respect, and you will never be judged. If you wish to speak to someone in London who cares about your financial future, contact us at London North: (519) 451-2122 or London South: (519) 681-8288 and let us help you get the answers you need.