Is a Consumer Proposal Worth It?
Wondering About the Benefits of Consumer Proposals?
Our Experts Discuss the Pros & Cons of Consumer Proposals
If you’re struggling with unsecured debt and want to take steps to get out of it, you might be exploring your options and wondering what the advantages of different financial solutions are. The experienced financial trustees at J. Bottom & Associates Ltd. want to help you explore the benefits of consumer proposals if you live in New Westminster, Port Coquitlam, or North Vancouver, BC. We have extensive experience in creating personalized solutions for all our clients to help them restore freedom and financial confidence.
Below, we are going to go over some of the different aspects of consumer proposals and how they might benefit debtors when trying to find relief. A consumer proposal will reduce your outstanding debt, eliminate interest payments, and provide relief from collection agencies reaching out to you. It is a legally binding agreement that gives you the ability to repay a portion of your debts that you can afford. With more than 55 years of combined experience, our financial trustees provide knowledgeable, simple, and practical solutions to help you overcome your financial challenges. We can help guide you through the process and find the right solution for you. Call us today for more information!
What is a Consumer Proposal?
When you file a consumer proposal, you’ll typically pay back much less than the total amount of money you owe. It’s a great deal for you, and it’s also a great deal for the creditors because you are offering something more than they would receive if you were to file for bankruptcy.
Another significant advantage of filing a consumer proposal is that the interest is eliminated. Once the creditors have agreed to the terms of your proposal, you’ll be expected to pay a fixed monthly amount with zero interest. Creditors typically allow debtors five years to make the payments, but you can also pay the proposal off early if you’re able to.
Consumer proposals can only help you with unsecured debts. A secured debt is always secured against an asset of some kind, such as a house or vehicle. The most common examples of secured debts are mortgages and car loans. You can include almost all types of unsecured debts in your consumer proposal, including:
- Credit cards
- Bank loans
- Tax debt
- Payday loans
- Utility bills
- Unsecured lines of credit
- Personal loans
- Student loans if it has been more than seven years since you completed your studies
While most unsecured debts can be included in your consumer proposal, there are a few exceptions. Here are two types of unsecured debts that you can’t include in a consumer proposal:
- Student loans if it has been less than seven years since you completed your studies
- Court-ordered fines & spousal or child support payments
What are the Benefits of a Consumer Proposal?
Many debtors choose to file a consumer proposal because it’s the most beneficial avenue for their situation. Some of the most valuable aspects of consumer proposals include:
- It allows you to avoid more severe action from creditors
- You typically pay much less than the total amount of the debt back
- You get immediate protection from creditors bothering you
- Creditors can’t garnish your wages or take legal action against you
- The proposal includes all your debts in one affordable monthly payment
- Monthly fixed payments may be lowered
- The proposal binds all the creditors you owe money to
- You’re less stressed about dealing with your debt
- You can retain your assets
- Your credit rating can be repaired sooner than if you file for bankruptcy
What are the Disadvantages of a Consumer Proposal?
While consumer proposals are great for some debtors, there are some other factors to consider. Consumer proposals can take longer than other debt relief strategies, and they also affect your credit rating. Here are some of the disadvantages of filing a consumer proposal:
- Most agreements are for a term of five years, while other debt-relief options may take less time
- Your credit rating is affected due to debt write-offs
- Your borrowing rates will be higher in the future since you’re considered high-risk
- Student loans less than seven years old aren’t included
Is a Consumer Proposal Right for Me?
It can be difficult to know where you stand when it comes to getting relief from your debt. Our team of financial experts can guide you every step of the way to help you determine whether you qualify for a consumer proposal based on the Bankruptcy and Insolvency Act. A consumer proposal might be the right option for you if you meet the following criteria:
- Your debts total more than $5,000 but do not exceed $250,000 (excluding your mortgage)
- You’re unable to repay all your debt in full
- You’re unable to receive debt consolidation because your debts are too high
- You can afford to make a payment each month, even if it’s a small one
- You want to avoid filing for bankruptcy
Start Your Consumer Proposal Filing Process Today
Whether you’re in over your head from credit card debt, utility bills, or personal loans, there are options available in New Westminster, North Vancouver, and Port Coquitlam, BC. Filing a consumer proposal can seem like a complicated process, but the team of experienced financial trustees at J. Bottom & Associates Ltd. can guide you each step of the way.
We are here to help answer any questions you might have, and there’s no such thing as a silly question to us. Our proven strategies have helped many of our clients break the cycle of debt and get back on track financially. Contact us today for more information about consumer proposals or to get started with your free consultation. We look forward to hearing from you!