If you’re struggling to pay your debts, then filing a consumer proposal could provide you with the debt relief you need. Essentially, a consumer proposal allows you to consolidate your debts and pay them back over a period of time, without having to declare bankruptcy. However, before you file a consumer proposal, it’s important to understand how long this process can take. In this article, we’ll answer some key questions about consumer proposals and discuss how long they typically last.
What is a Consumer Proposal?
A consumer proposal is a debt relief option that is available to Canadians who have unsecured debts of less than $250,000 (excluding mortgages) but more than $5,000. Essentially, a consumer proposal allows you to make an offer to your creditors to pay back a portion of what you owe. If the majority of your creditors agree to your proposal, then it becomes binding on all creditors.
What Are the Advantages of Filing a Consumer Proposal?
Filing a consumer proposal offers a range of advantages to those in debt. By utilizing such a proposal, a debtor can restructure the existing debts and the payments associated with them. In turn, this helps people manage their obligations more responsibly, allowing them to keep their financial commitments in check. Additionally, once accepted by creditors, interest on existing unpaid balances will be stopped, preventing additional fees from piling up and making it much easier for the debtor to meet their goals. Filing a consumer proposal also protects debtors from wage garnishment as well as any legal action taken by creditors that could potentially harm one’s credit rating. Ultimately, these are just some of the benefits offered by filing for a consumer proposal that provide valuable assistance to consumers who find themselves in troublesome financial waters.
How Long Does it Take to File a Consumer Proposal?
The process of filing a consumer proposal typically takes between 30-45 days. During this time, you’ll work with a Licensed Insolvency Trustee (LIT) who will help you develop a proposal that is fair to both you and your creditors. Once your proposal is completed, it will be sent to your creditors for review. They will either accept or reject your proposal, and if it is accepted, then you’ll begin making payments.
How Long Does the Consumer Proposal Last?
The length of your consumer proposal will depend on the terms of your proposal. Typically, consumer proposals last between 1-5 years. During this time, you’ll make monthly payments to your LIT, who will then distribute payments to your creditors. If you complete your proposal successfully, then your debts will be considered paid in full, and you will no longer owe any money to your creditors.
Can You Pay Off Your Consumer Proposal Early?
Yes, you can pay off your consumer proposal early. In fact, many people choose to do so in order to minimize the amount of interest they’ll pay over the life of their proposal. If you choose to pay off your proposal early, you’ll simply need to make a lump sum payment to your LIT to cover the remaining balance of your proposal.
How Long Should You Offer to Pay it Off?
When it comes to consumer proposals, many people forget to consider an important factor: how long should you offer to pay it off? While some may think that offering a shorter term is the way to go, it may actually result in higher payments in the long run. That’s why some experts suggest aiming for the maximum term of 60 months, which can help keep payments as low as possible. This move can also prevent creditors from asking you to increase your payments later on, as long as your proposed payments are reasonable based on your finances. Don’t overlook the time factor when making your proposal–it could make all the difference in your financial future.
Can You File Another Consumer Proposal After Your First One is Completed?
If you find yourself in a similar financial situation after your first consumer proposal is completed, then you can file another proposal. However, keep in mind that filing a second proposal may be more difficult than filing your first one. Your creditors will look at your credit report and financial history to determine whether or not you’re a good candidate for another proposal.
Contact J. Bottom & Associates Ltd.
Filing a consumer proposal can be a great option for anyone who is struggling with debt. While the length of the process may seem daunting at first, it’s important to remember that a consumer proposal is designed to give you the debt relief you need in a manageable way. By working with a Licensed Insolvency and Bankruptcy Trustee, you can develop a proposal that is fair to both you and your creditors and get started on the path to financial freedom. Contact J. Bottom & Associates today at 604-540-1920!