A consumer proposal is an alternative to declaring personal bankruptcy. It's an arrangement that's negotiated with your creditors through a consumer proposal administrator (who is also a licensed bankruptcy trustee). A legally binding agreement is put in place to provide you with immediate protection from debt collectors. and arrange for a partial repayment of your total unsecured debt owing.
When you file a consumer proposal you agree to pay a portion of what you owe, and your creditors agree to forgive the balance.
When you file a consumer proposal:
If a consumer proposal is a viable option for you, it can be beneficial in the following ways:
"Surplus income" is not a consideration, as it is in bankruptcy. Your assets are not at risk, and they will not have to be surrendered to the administrator as part of your proposal agreement. Also, once your proposal has been accepted your payments will not increase if your income increases. You will owe nothing more than in the agreed upon terms of the proposal.
The negative effect on your credit score is generally not as severe as in a bankruptcy. Consumer proposals typically produce an R7 rating, whereas personal bankruptcy will produce an R9, which is the lowest rating, and why you should investigate all other options prior to choosing to file for bankruptcy.
If you file a consumer proposal, you have the opportunity to repay a portion of your debt. The sense of control you regain can bring a dramatic improvement in self esteem.
Why would your creditors accept a consumer proposal and accept less than the full amount they are owed?
Most creditors don't want you to go bankrupt. In this case, they may expect to receive nothing at all. A proposal will generally allow them to recover more than they would in a bankruptcy.
A Consumer Proposal may be a viable solution for you if:
A consumer proposal will not:
If you would like some more information about consumer proposals, or to determine if you qualify, an easy next step is to contact a proposal administrator for a free personal consultation. He or she will discuss with you the benefits of filing a proposal, your responsibilities, and determine if you qualify.
There's no need to hesitate; your first appointment is always free and you'll walk away with peace of mind knowing you've gotten trusted professional advice on personal debt reduction.
If you are looking for help in getting out from debt booking your free personal consultation is an easy next step.