If you are not capable of making ends meet and your debt is growing out of control, you must look into your options for getting back on your feet. A consumer proposal might be the solution if you have already tried budgeting and credit counseling. As an alternative to bankruptcy, consumer proposals are commonly pursued by financially troubled individuals.
The proposal constitutes a binding contract between the borrower and the lenders to resolve the debts. The proposal offers a lowered amount rather than the total amount owed to creditors.
Positive Effects of Getting a Consumer Proposal
It’s easy to feel helpless when you are drowning in debt. However, a consumer proposal is an alternative to consider. Lots of individuals have filed consumer proposals as a means of debt relief. An insolvency trustee can help you reach an agreement with your creditors using a consumer proposal.
Therefore, you can negotiate reduced payments on your unsecured financial debts. People frequently choose this option over filing for bankruptcy so they can retain some of their properties.
Pay off Debts
Unlike bankruptcy, the main objective of a consumer proposal is to help people pay off their debts rather than discharge them. Reduced monthly repayments are one of a consumer proposal’s most notable positive aspects. You and a certified insolvency trustee will figure out a manageable monthly payment plan.
If your proposal is approved, you will end up making one monthly payment to the trustee in place of the settlements you would typically make to your creditors. Your trustee will then give their share to your creditors. If you are interested in finding a less stressful means of paying off your debt, you can look for consumer proposal companies online that provide reduced payment plans.
Avoid Bankruptcy
Filing bankruptcy is often viewed as a last resort when other debt-relief options have been exhausted. Some debtors may benefit from doing this, but they should weigh their options prior to making a final decision.
In contrast to bankruptcy, in which you are obligated to give up all your non-exempt assets, a consumer proposal enables you to keep everything you have. Some individuals may lose their jobs if they declare bankruptcy, so a consumer proposal is beneficial in this situation.
Collection Calls End
The constant harassment of debt collectors can be too much to handle when you’re already behind on payments and have no idea how to catch up. The only two options to legally prevent creditors from contacting you are to declare bankruptcy or to file a consumer proposal.
Once you file a consumer proposal, the trustee will inform the debtor’s creditors. By law, they are required to stop their collection activity. Communication can take many forms, like letters, phone calls, and wage garnishment. Lots of people will find this to be a huge weight off their shoulders.
Improve Financial Management Skills
A consumer proposal often includes credit counseling as a mandatory program. Your trustee will explain how your debt grew out of hand and provide guidance on avoiding similar problems in the future. Financial topics include budgeting, saving, investing, and making the most of your credit. You can visit websites such as debtandcreditsolutions.ca to learn more about how to effectively manage your debts in order to avoid financial difficulties.
Conclusion
When you take a closer look, you’ll discover that a consumer proposal actually brings many perks to the table, even though it might not initially sound like a very appealing process to go through. If you are in a tough situation and do not know what to do, consider giving some thought to making this step towards cutting down your debt and regaining financial stability.
