If you cannot 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 answer if you have already tried budgeting and credit counseling. As an alternative to bankruptcy, consumer proposals are frequently pursued by financially troubled people.
The proposal constitutes a binding contract between the debtor and the creditors to resolve the debts. The proposal offers a lowered amount 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 consider. Lots of individuals have filed consumer proposals as a way of debt relief. An insolvency trustee can assist you in reaching a deal with your creditors using a consumer proposal.
Therefore, you can discuss lowered settlements on your unsecured debts. People frequently pick this solution over filing for bankruptcy to keep some of their possessions. Talking to a certified insolvency trustee might help you learn more about the advantages of filing a consumer proposal to reduce debt.
Pay off Debts
Unlike bankruptcy, the primary objective of a consumer proposal is to help people pay off their debts rather than discharge them. Reduced monthly repayments are one of a consumer proposal’s most notable positive aspects. You and a certified insolvency trustee will figure 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 payments you would regularly make to your creditors. Your trustee will then give their share to your creditors.
Avoid Bankruptcy
Filing bankruptcy is commonly seen as a last hope when other debt-relief choices have been exhausted. Some debtors may benefit from doing this, but they should weigh their options prior to making a final decision.
In contrast to bankruptcy, in which you are required to surrender all your non-exempt possessions, a consumer proposal allows you to keep everything you own. Some people may lose their jobs if they declare bankruptcy, so a consumer proposal is advantageous in this situation. Aside from the consumer proposal, if you are searching for an alternate way to avoid bankruptcy, you may choose credit consolidation in Halifax as your method of reducing debt.
Collection Calls End
The nonstop harassment of debt collectors can be too much to handle when you’re already behind schedule on payments and have no idea how to catch up. The only two options to legally prevent creditors from contacting you are to declare bankruptcy or to submit a consumer proposal.
As soon as you submit a consumer proposal, the trustee will inform 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. Many people will find this to be a tremendous weight off their shoulders.
Improve Financial Management Skills
A consumer proposal usually consists of credit counseling as a mandatory service. Your trustee will explain how your financial debt grew out of hand and advise how to prevent 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 actually brings many perks to the table, although it might not initially sound like a very appealing process to go through. If you are in a tough situation and do not know what to do, consider giving some thought to making this step towards cutting down your unpaid debt and regaining financial stability.
