Paying off debt isn't always easy, and even the monthly interest payments can sometimes seem too high! If your budget is too tight to repay the various amounts you have to pay monthly to your creditors, you can get out of it by making them a consumer proposal.
What is a consumer proposal?
A consumer proposal is an offer you make to your creditors, giving them the opportunity to take advantage of your services. offering to pay off only part of your debts (credit cards, taxes, various loans, electricity bills, etc.).
If your proposal is accepted, you will then be able to repay the amount you have heard. over a longer period of timeby paying a lower monthly amount (and no interest!). This repayment agreement must be made over a maximum period of 5 years.
In Quebec, from June 2017 to June 2018, the number of consumer bankruptcies decreased by 7.6 %, while consumer proposals increased by 6.5 % (Insolvency statistics in Canada). This is becoming an increasingly popular and effective way of getting out of debt.
Conditions for making a consumer proposal
To file a consumer proposal, the following conditions must be met:
- Amount of debt : the amount of your debts must not exceed 250,000 $ (the mortgage loan taken out to buy your home is not included in the calculation).
- Bankruptcy or insolvency : you must be bankrupt OR have more than 1000$ in debts and owe more than the value of your assets, while being unable to pay your credit card, Hydro and other current bills, as well as your tax liabilities.
If you're in this situation, now's the time to file a consumer proposal by making an appointment with a trustee in bankruptcy.
Consult a financial recovery advisor
By making an appointment with a licensed insolvency trustee, you can obtain information that will shed light on the consumer proposal. The financial turnaround will help you list your debts and draw up a proposal that will be acceptable to your creditors.
The trustee will then send all the paperwork to the creditors and forward the monthly amount to them on your behalf. The trustee's fees are included in the agreement.
Free from a burden
With a consumer proposal, the harassment of creditors and the stress of high debts will be a thing of the past! Your wages cannot be garnished, your creditors cannot sue you, and your assets are protected. (car, home, RRSP or inheritance).
Only a note will be included in your credit file, indicating that you have settled your debts according to a consumer proposal. And you'll be able to live a more serene and free life too heavy a burden.
