If you are unable to make 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 may be the solution if you have already tried budgeting and credit counseling. As an alternative to bankruptcy, consumer proposals are commonly sought by financially troubled individuals.
The proposal constitutes a binding agreement between the debtor and the creditors to address the debts. In the proposal, a reduced amount is offered to creditors instead of the full amount owed.
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 take into consideration. Lots of individuals have filed consumer proposals as a way of debt relief. An insolvency trustee can assist you in reaching an agreement with your creditors through a consumer proposal.
As a result, you can discuss reduced settlements on your unsecured debts. People often pick this solution over filing for bankruptcy to retain some of their properties.
Pay off Debts
Unlike bankruptcy, the primary 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 in Halifax. You and a certified insolvency trustee will work out a manageable monthly payment plan.
If your proposal is accepted, you will end up making one monthly payment to the trustee in place of the settlements you would normally make to your creditors. Your trustee will then give their share to your lenders.
Avoid Bankruptcy
Declaring bankruptcy is often seen as a last resort when other debt-relief choices have been exhausted. Some debtors may gain from doing this, but they need to weigh their options before deciding. In contrast to bankruptcy, in which you are required to give up all of your non-exempt possessions, a consumer proposal allows you to keep all the things you have. Some people may lose their jobs if they declare bankruptcy, so a consumer proposal is advantageous in this situation.
Collection Calls End
The nonstop harassment of debt collectors can be overwhelming when you’re already behind on payments and have no idea how to catch up. The only two solutions to legally prevent creditors from calling you are to declare bankruptcy or to file a consumer proposal.
Once you submit a consumer proposal, the trustee will notify the debtor’s creditors. By law, they are mandated to cease 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 usually includes credit counseling services as a necessary program. Your trustee will talk about how your debt grew out of hand and provide advice 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 realize that a consumer proposal truly brings many perks to the table, although it might not initially sound like a very appealing process to experience. If you are in a tough situation and do not know what to do, consider making this step toward reducing your debt and regaining financial stability.