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 frequently sought by financially troubled individuals.
The proposal constitutes a binding contract between the borrower and the lenders to resolve the debts. In the proposal, a reduced amount is offered to creditors rather than the total amount owed.
Positive Effects of Getting a Consumer Proposal
It’s easy to feel hopeless 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 through a consumer proposal.
Therefore, you can discuss reduced payments on your unsecured debts. People frequently pick this solution over filing for bankruptcy so they can retain some of their properties.
Pay off Debts
Unlike bankruptcy, the main intention of a consumer proposal is to help people pay off their debts rather than discharge them. Reduced month-to-month payments are one of the most significant positive aspects of a consumer proposal. 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 payments you would normally make to your creditors. Your trustee will then give their share to your lenders. If you want to know more about why submitting a consumer proposal is the most effective way to settle your debt, click here.
Avoid Bankruptcy
Declaring bankruptcy is often viewed as a last resort when other debt-relief options have been exhausted. Some borrowers may benefit from doing this, but they should weigh their options before making a decision.
In contrast to bankruptcy, in which you are required to surrender all of 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.
Collection Calls End
The nonstop harassment of debt collectors can be overwhelming when you’re already behind schedule on payments and have no way to catch up. The only two solutions to legally stop creditors from contacting you are to declare bankruptcy or to submit a consumer proposal.
Once you submit a consumer proposal, the trustee will inform the debtor’s creditors. By law, they are mandated to stop their collection activity. Communication can take many forms, like letters, phone calls, and wage garnishment. Many people will find this to be a tremendous weight off their shoulders.
Improve Financial Management Skills
A consumer proposal often includes credit counseling as a necessary program for debt relief. Your trustee will talk about how your debt grew out of hand and provide guidance on how to avoid similar situations in the future. Financial topics include budgeting, saving, investing, and making the most of your credit.
Conclusion
When you take a closer look, you’ll discover that a consumer proposal brings many perks. However, it might not initially sound like a very appealing process to experience. If you are in a tough situation and don’t know what to do, consider giving some thought to making this step towards reducing your debt and regaining financial stability.
