Consumer Corner: Everyone is Recommending a Consumer Proposal When I Want to Go Bankrupt
Most people understand the concept of bankruptcy – a situation where you surrender everything you own in exchange for debt elimination – but what about a consumer proposal? Perhaps you’ve heard the commercials or done your own research. If you’re in significant debt, having trouble making monthly payments, or just looking for some breathing room, a consumer proposal is a fantastic debt relief option.
If you’re looking for a solution to a financial problem or accumulated debt, you may be considering the benefits of a bankruptcy versus consumer proposal and wondering which one to choose.
So, what exactly is a consumer proposal? It is a formal, legally binding process that is administered by a Licensed Insolvency Trustee (LIT). In this process, the LIT will work with you to develop a “proposal”—an offer to pay creditors a percentage of what is owed to them.
Some consumers feel they want to go the bankruptcy route to solve their debt problems in one fell swoop, but find that a consumer proposal is recommended instead. What’s the difference?
Some benefits of a consumer proposal include:
- You can pay it off early – you can’t do that with a bankruptcy.
- It’s your final agreement – bankruptcies will continue until your bankruptcy trustee discharges you.
- You know exactly when the debt will be paid off.
- You can rebuild credit sooner – consumer proposals are removed from the credit report three years after they are paid in full, whereas bankruptcies stay for six years from the date you are discharged.
- Your debts are combined into one monthly payment that you can afford.
- If the majority of your creditors accept the consumer proposal, your other creditors are automatically included.
- All interest stops, as do most wage garnishments. This is the same with bankruptcy.
If you’re thinking of making a consumer proposal, start by consulting with a financial professional who specializes in this before heading directly to trustee. They can structure your information and negotiate your proposal with the LIT to help you potentially save thousands of dollars, even tens of thousands of dollars.
Protect yourself and your money. At DebtCare, we can independently review your financial situation to make practical financial recommendations that will work for you.
We’re always in your corner. Call us today at: 1 (888) 890-0888.