When debt keeps piling up and it has reached a point where you can no longer make monthly payments on time, a Toronto consumer proposal may be able to help you get back on track. It is a solution that can give you more time to manage your debts but still allow you to pay them off instead of just filing for bankruptcy.
A consumer proposal can help you pay off unsecured debts, such as:
- Credit cards
- Lines of credit
- Personal loans
- Payday loans
- Income taxes
- Student loan debts that remain after you’ve been out of school for over 7 years
It can be a good to solution to consider if:
- Your total unsecured debts are greater than $1,000 but less than $250,000.
- You want to keep your house, car, retirement savings and other assets while paying off your debt.
- You can’t make monthly payments on time and you can’t reduce the balance on your debt.
- You’d like to pay off all your debts in three to five years.
- You’d like to pay just one payment every month.
- You can afford to pay just a portion of your debt and would like to negotiate for a reduced amount.
- You want to stop interest charges from ballooning your debt.
- You want to prevent creditors from taking legal action against you.
- You want to put an end to harassing phone calls.
A consumer proposal is a legal agreement between you and your creditors. You’re basically asking your creditors to agree on repayment terms which may include:
- A request to accept a lower amount than the total you owe them.
- A request for you to be given more time to pay back the debt you owe.
- A request to lower the amount of your monthly payment.
- A request to stop interest and penalty charges on your debt.
A Licensed Insolvency Trustee will help you negotiate the terms of your proposal and come up with a fair settlement with your creditors. Your trustee will make sure to draft the proposal in such a way that all your creditors will accept it and the courts will approve it.
As a formal debt solution, consumer proposals are legally binding. This means that all creditors are legally bound to participate in the proposal and the agreement cannot be cancelled without proper justification.
It also offers guaranteed legal protection from your creditors which informal debt solutions, such as a debt management plan or DMP, cannot provide. Once the proposal is filed and accepted by your creditors, a Stay of Proceedings automatically takes effect and you are immediately protected by the courts and your creditors cannot take any legal action against you.
A consumer proposal is the only formal insolvency solution that will help you to avoid bankruptcy. It offers the same legal benefits that a bankruptcy would, minus the hassle of dealing with inconveniences such as surplus income, the loss of valuable assets, and the negative impact to your credit rating.
Mainly because it is used as an alternative to bankruptcy, consumer proposals are now one of the most popular debt relief solutions sought by consumers. Although it is popular, it does not mean that it is a solution that can work for all. The best solution for you will greatly depend on your financial circumstances. Only a licensed insolvency trustee can evaluate your situation and review your options and tell you if filing a Toronto consumer proposal is the right solution for you.
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