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 might be the solution if you have already tried budgeting and credit counseling. As an alternative to bankruptcy, consumer proposals are frequently pursued by financially troubled individuals.
The proposal constitutes a binding agreement between the borrower and the creditors to address the debts. In the proposal, a lowered amount is given to creditors rather than the total amount owed.
Positive Effects of Getting a Consumer Proposal
It’s easy to feel hopeless when you are drowning in debt. However, a consumer proposal is an alternative to take into consideration. Thousands of individuals have filed consumer proposals as a way of debt relief. A licensed insolvency trustee in Nova Scotia can help you reach an agreement with your creditors through a consumer proposal.
Therefore, you can negotiate reduced payments on your unsecured financial debts. People often pick this option over filing for bankruptcy to retain some of their possessions.
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 significant positive aspects. You and a certified insolvency trustee will figure out a manageable monthly payment plan.
If your proposal is approved, 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 lenders.
Avoid Bankruptcy
Filing bankruptcy is commonly viewed as a last hope when other debt-relief choices have been exhausted. Some debtors may benefit from bankruptcy help, but they should weigh their options prior to making a final decision.
In contrast to bankruptcy, in which you are obligated to surrender all of your non-exempt assets, a consumer proposal enables you to keep all the things you have. Some individuals may lose their work if they declare bankruptcy, so a consumer proposal is advantageous in this situation.
Collection Calls End
The nonstop harassment of debt collectors can be overwhelming when you’re already behind schedule on payments and have no way how to catch up. The only two options to legally stop creditors from calling you are to declare bankruptcy or to file a consumer proposal.
As soon as you submit a consumer credit proposal, the trustee will notify the debtor’s creditors. By law, they are mandated to stop their collection activity. Communication can take many forms, like letters, phone calls, and wage garnishment. Lots of people will find this to be a huge weight off their shoulders.
Improve Financial Management Skills
A consumer proposal often consists of credit counseling as a necessary service. Your trustee will explain how your debt grew out of hand and offer guidance on avoiding similar problems in the future. Financial topics include budgeting, saving, investing, and utilizing your credit.
Conclusion
When you take a closer look, you’ll discover that a consumer proposal brings many perks. However, it might not initially sound like a very appealing process to experience. If you are in a tough situation and don’t know what to do, consider giving some thought to making this step toward cutting down your debt and regaining financial stability.
