05/29/2024
Settle Your Debt With A Consumer Proposal
If you've got debt - maybe it's time to negotiate a settlement with your creditors? We can help, let's talk about how a Consumer Proposal can help to free you from debt today. (PS - our advice is also free!)
If you'd like to avoid bankruptcy - we don't blame you.
Bankruptcy is typically the last option that people consider when it comes to settling debt and obtaining a fresh financial start. Fortunately, a consumer proposal can help you avoid bankruptcy AND settle your debt(s) with a relatively easy process.
Understanding What A Consumer Proposal Is
It's important to understand what you're doing if you choose to file a consumer proposal. First, you should know that a proposal is a formal debt settlement remedy. It is possible to "settle" debts informally (this means without the Bankruptcy and Insolvency Act (BIA) to support you) but it's usually a much tidier process if you work with a Licensed Insolvency Trustee and use the power of BIA legislation to back you up.
A consumer proposal is an agreement between you and your creditors to settle your debts with the trade-off of a slightly less damaging credit score than a bankruptcy. The process begins with a simple negotiation that lasts at least 45 days. Your creditors can vote on the offer you submit to them via your Trustee. Your offer must be better than a bankruptcy (with regard to how much money creditors could receive from the process) and it must also be realistic to your current financial situation. A realistic offer will consider your assets and your income to present a fair discount of your total debt - something that your creditors should find reasonable enough to agree to.
Your creditors can vote in favour, against, or against with a counter offer. Your Licensed Insolvency Trustee will monitor the votes and help you consider your options should your creditors wish to deviate from your original offer.
The majority of consumer proposals that we have filed are accepted either as they are, or after a little back and forth with creditors seeking to increase the amount that is offered. Rarely does someone have to turn to bankruptcy instead, making this debt-free option very appealing to most people.
To File a Proposal in Canada You'll Need to Follow a Few Simple Steps:
1. Find a Licensed Insolvency Trustee that you would like to work with. You can try going on Google - but you're going to get the firms that pay the most money to advertise. If you really want to find the right LIT for you - start by talking to people you know. You'd be surprised how many people around you may have already worked with an LIT to clear up debt. You can also check the status of an LIT operating in Canada to make sure they are legit via the government's website list of currently practicing (in good standing) LITs here: https://www.ic.gc.ca/app/scr/tds/web/?lang=eng
2. Be formally assessed and prepare for filing. Once you've got yourself an LIT, you can work with them to assess your situation, make recommendations on your available options, and assist you in preparing to file your proposal. You'll be asked questions about your debts, assets, income, expenses, and financial history. Your LIT will perform a comparison to bankruptcy to ensure that the offer you'd like to make will have a reasonable chance of acceptance.
3. File your consumer proposal. In Canada, you are required to work with an LIT to file a proposal or bankruptcy. Once you've made your decision and are ready to present an offer to your creditors, your LIT will draft the appropriate documents for you to sign. Once signed, the documents will be sent to your creditors for review, and the 45 day voting period will commence. After the voting period is over your LIT will remain by your side throughout the duration of your contract.
How Long Does A Proposal Last And What Do You Need To Know?
A consumer proposal can last up to 60 months (5 years). You are always welcome to accelerate your payments or pay off the contract early. You will be protected from any creditor action against you (with very few exceptions) during the duration of your proposal. Your LIT will be the "middle man" between you and your creditors so you do not have to communicate with them directly.
You will be required to attend 2 mandatory financial counselling sessions that will be arranged for you by your LIT's office. You must keep up with your payments to the proposal and never fall 3 payments behind. If you miss 3 payments, your proposal will be cancelled and your hard work to settle your debts will be jeopardized. But don't worry, if you do struggle to make payments during the proposal a quick call to your LIT's office to chat about your options can help you keep your proposal in good standing.
At the end of your proposal, after you've paid everything that you agreed to pay and have completed your 2 counselling sessions, you'll be released from all of the debt that was included. You'll regain your financial independence and get the fresh start that you need. Equifax and Transunion will report the proposal activity for 3 additional years.
If you'd like to discuss how a consumer proposal might work for your debt problem, we offer FREE consultations and can assess your situation in less than 30 minutes by phone. Connect with us here: https://brieftrustee.com/contact/
Connect with us today to see if a consumer proposal is the right option for you to settle your debts!
