Struggling with debt? You’re not the only one. In some cases, you are lucky enough to nip it in the bud before what you owe gets out of hand. In other cases, you are saddled with a large amount that needs to be paid and you don’t know how to handle it. What if there was a way for you to find an agreement with your creditors, put together some monthly payments, and get debt collectors off your back all at once? It’s already out there, and it’s called a consumer proposal.
What You Need To Know
If you want to manage debt with a consumer proposal, your first step should be to seek out a licensed insolvency trustee. Not only will they help guide you towards the option that makes the most sense, they will be responsible for drafting your consumer proposal and mediating the process between you and your creditors.
In essence, a consumer proposal is a legally binding agreement between you and the creditor to pay off a portion of your debt via monthly payments, based on your income. In exchange, your debt will be discharged. Note that your creditors have a right to accept or refuse the terms, so you want to make sure that you have a skilled trustee to put together a deal both sides can agree on. The biggest differences between this and bankruptcy boil down to time vs. assets. By filing a consumer proposal, your assets are safe, but you will be paying for much longer. This can be up to 5 years versus the 9 months to 21 months with bankruptcy.
Where Alternatives May Fall Short
You may think this is a step too far, and are looking at some of the other debt solutions out there. While being aware of all your options it’s good, everything has its pros and cons. For example, taking the simple route and trying to cut down on spending or cycle money from savings to debt only really works before the fact. Because of interest rates and other situations, if you’ve been in debt for a while, you generally need to take a different solution. However, if you are financially stable, setting aside money for a rainy day can keep you from falling into debt.
As another option, you may be looking at the other extreme: bankruptcy. However, bankruptcy has serious consequences, including giving up your assets and being saddled with the worst possible credit rating for as long as 14 years, depending on your income. Bankruptcy is a viable option for some, but you will want a professional’s opinion to see if that group includes you.
Wondering about what some of the other facets are to consumer proposals and the whole process? Stop by Chande.ca for more information, and potentially get started on setting up your own consumer proposal. In many cases, you won’t have to pay a lot for an initial consultation with a trustee, and you may learn a lot about your financial options.