7 Things You Need to Know About Consumer Proposals
If your total debt is less than $250,000, then you are eligible to file for a consumer proposal. Keep reading if you want to find out more about consumer proposals and if it is suitable in your financial situation.
1. You do not have to file for bankruptcy
One of the biggest benefits of filing for a consumer proposal is that it is an alternative to bankruptcy. Instead, you get in touch with a licensed bankruptcy trustee who advises you on how much you might pay every month. This will depend on how much you own and earn. Bankruptcy has several disadvantages such as a bad credit rating and access to credit at a high interest rate.
2. You Need a Bankruptcy Trustee
Not just anyone can file for a proposal. It is important to work with a trustee who is licensed by the government to avoid being conned. A trustee will inform you of the process and how much you get to repay.
3. Pay less of your debt
Another characteristic of consumer proposals is that the total amount paid to debtors is significantly less than what you owe. The amount to be paid is determined by your trustee. This is based on how much you earn and the value of your assets. Once this amount is decided, your main creditor has to approve it before the proposal is final.
4. It is a method of debt consolidation
Debt consolidation is one of the main reasons why people opt for consumer proposals. This is suitable if you have a stable source of income, but cannot afford to pay off all your debts every month. A consumer proposal consolidates all you owe to your creditors and enables you to make monthly payments that fit into your budget. If you have active student loan payments, they can be paused. However, loans that are less than 7 years are not included in proposals.
5. No interest charges
Debts in a proposal are not subject to interest charges. A sum total is calculated and these are converted into monthly payments. Monthly payments are dependent on the period chosen, usually between 3 to 5 years. This is effective from the date of filing for the proposal.
6. You get to keep your assets
A proposal will enable you to keep your home, car and other assets that you have. This gives you the benefit of leading your normal life. Additionally, you get to pay off all unsecured debt such as credit cards and taxes.
7. Proposals are Public Information
If someone searches for your credit information, then they will be able to know that you have filed for a consumer proposal. Although it remains on your credit record, it is not as destructive to your credit rating as filing for bankruptcy. Visit the Chande & Company Inc website for more information.