The office of Superintendent of Bankruptcy released statistics that the number of consumer proposals filled by individuals resident in Ontario increased by 22%. Consumer proposals are obviously no longer a secret.
What exactly is a consumer proposal? It is a legally binding settlement between creditors and debtors. In its simplest form, a consumer proposal is an offer from you to an unsecured creditor; you explain your situation that your unsecured debt is far more than you can afford to pay at the moment or at any time in the future.
This is not an option you can handle yourself. You will have to collaborate with a licensed bankruptcy trustee such as Cooper & Co. Ltd who will examine your financial situation to determine if you qualify and then file a proposal for you. A proposal of this sort is Canada’s best kept secret because you must use a bankruptcy trustee.
Most Canadians are afraid of bankruptcy for this reason, they do nothing to find the truth about it. Again many people think bankruptcy trustees only deal with personal bankruptcies hence they are reticent to consult with one thereby losing an opportunity to have been advised on the option of a consumer proposal as an alternative to bankruptcy.
During filing, the first step is to determine if you qualify. To qualify, you must be insolvent, meaning that your current situation should be such that you really cannot afford to repay the amount you owe. Visit a licensed bankruptcy trustee in your area if you need more answers to the question of what a consumer proposal is and how it may help your peculiar financial situation.
You need to consider the pros and cons of consumer proposal as an alternative to bankruptcy. The most common advantage is that as soon as you file a proposal, your creditors cannot garnish your wages, sue you or take you to court. You immediately receive protection from your creditors. This protection initially last for 45 days and will be extended if the creditor accept your proposal.
Secondly, all interest on your credit cards will be frozen from the date of filing for your proposal, there will be no further interest payments required from you. Thirdly, most wage garnishments will be stopped immediately. The only exception would be garnishments for child and spousal support ordered by a court.
Fourthly, a consumer proposal applies to many government debts, so if you owe taxes, they can be addressed in the proposal.
A consumer proposal is legally binding and is administered by a trustee licensed by government and is supervised by the courts, hence once a proposal is accepted, creditors cannot rescind on their decision and demand for more money.
Not everyone qualify for a consumer proposal. You need to have an income to make the monthly payments. In comparing bankruptcy vs consumer proposal in Ontario, a personal bankruptcy might be a better option if you have a low income. However, if you incur more debt than you can handle, a consumer proposal might be an awesome option for handling your debt.