You have a hard time making ends meet every month; why not try to make a consumer proposal? A consumer proposal is a formal process, conducted in writing, whereby the consumer offers to settle their debts with the support of their creditors. They pay back what they owe with no interest to get charged. The consumer proposal in Canada allows individuals to file for bankruptcy protection if they cannot afford their consumer debts. This method of filing for bankruptcy became available in 2004 when the Bankruptcy and Insolvency Act got amended to provide for three options for dealing with debtor-creditor financial obligations. The creditors to a consumer proposal are paid based on the equity of the debtors’ interest in real or personal property and all other amounts that are owed to the creditors unless an equal or more outstanding priority creditor provides security for payment. It is advisable to use the help of a professional like Powell Associates Ltd to help you through the process. They will guide you, and you will only have to make monthly payments based on what you owe your creditors.

Is It Reasonable To Make A Consumer Proposal?

Not always, but sometimes, yes. If you are drowning in debt, have no income, and have no way of getting out of this situation, a consumer proposal might be suitable. A consumer proposal is where a trustee in bankruptcy will help you and your creditors agree on how much of your debts you will repay.

If you get yourself into a situation where a consumer proposal is the only option, please talk to someone who knows about consumer proposals. Do not try to do this yourself. A consumer proposal administrator will negotiate with your creditors on your behalf. Creditors can vote against the consumer proposal, but everyone must agree if most creditors agree to accept it. If creditors reject a consumer proposal, the debtor may go bankrupt. Some people will take advantage of you and make promises they cannot keep. Some of these companies charge high fees or take a percentage of your settlement and will get you into worse trouble than you are already in. It would help if you made sure that when you sign your consumer proposal agreement, all your debts are included in the contract so that all your creditors know that they have agreed to the terms and conditions of the deal.

How Does The Consumer Proposal Work?

The Consumer Proposal is a spectacularly simple idea. You propose a company for something you want, and if they agree, you make an agreement and proceed. In a consumer proposal, you either pay a lump sum amount to your creditors or make monthly payments over an established period (not more than five years). You may be required to provide an asset as security to repay the debt (such as your home).

What Is The Difference Between A Consumer Proposal And Bankruptcy?

In short, the most significant difference is that a consumer proposal allows you to avoid bankruptcy and keep all of your assets. In bankruptcy (known as filing for personal bankruptcy), you will lose some or all of your support and get discharged from your debts after nine months.

In Canada, proposals to creditors under the Bankruptcy & Insolvency Act (BIA) are typically used when individuals and businesses need debt relief. A consumer proposal is an alternative to bankruptcy that helps individuals who cannot pay their debts as they become due. The consumer proposal process allows you to repay only a portion of your unsecured debt while being protected from collection actions and lawsuits by creditors.

Today, it is easy to get into too much debt and not be able to pay back your debt. When this occurs, it is best to consider making a consumer proposal because this will prevent many problems from happening. First of all, you must find a reputable credit consolidation company. A credible company will perform its due diligence to ensure that you are declaring all income and shortages that you may have on your books and will not charge additional fees for drawing up the proposal. Once both parties have signed the proposal, the debtor must hand over all documents concerning any properties or vehicles in their possession, providing a form filled out with authorized dealers for transfers of ownership of said property. The remaining balances on credit cards and loans from financial institutions will also get transferred to the credit consolidation company.