Consumer Proposals

Consumer Proposal Canada: #1 Alternative to Bankruptcy

If you are struggling with debt and don't see a way out, consumer proposal Ontario may be the solution for you. A consumer proposal is a legal process that allows you to negotiate with your creditors to create a repayment plan that suits your budget. As a result, you may be able to settle your debts for less than what you owe and avoid bankruptcy.

Consumer proposals can help reduce and sometimes eliminate debt and stop wage garnishments, legal actions, and creditor harassment. If you are considering a consumer proposal in Ontario, speak to an experienced trustee who can help you get started. Risman Zysman Inc. is just around the corner if you need a professional guide to consumer proposals and dealing with debts the right way.

What Is A Consumer Proposal?

A consumer proposal is a formal, government-approved debt settlement plan that can help you get out of debt. It's an alternative to bankruptcy and is designed to help you repay your debts over time while minimizing the fees and interest charges.

A consumer proposal is a formal agreement between you and your creditors that allows you to repay your debts, usually three to five years. The terms of the agreement are negotiated by a Licensed Insolvency Trustee (LIT), who will work with both you and your creditors to come up with a payment plan that works for everyone.

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How Much Does a Consumer Proposal Cost?

A Consumer Proposal can be an excellent solution for those struggling with debt, as it allows you to repay what you owe while still maintaining some sense of financial stability. The proposal must be approved by a majority of your creditors and, once it is accepted, becomes legally binding. The advantage of a Consumer Proposal over declaring bankruptcy is that your assets are not seized, and you can keep your credit rating intact.

There are no upfront fees in a consumer proposal. The only cost is the monthly payment you make as part of the consumer proposal.

However, the cost of a local consumer proposal and the settlement amount will vary depending on the size of your income and assets. When you file a consumer proposal, an approved insolvency trustee will work with you to develop a repayment plan that is manageable and affordable for you. Your trustee will also contact your creditors and ask them to accept the proposed repayment plan. If most of your creditors agree to the plan, your bankruptcy filing will be annulled (meaning it never happened), and you will be given a fresh start.

What Debts Are Included in a Consumer Proposal?

A Consumer Proposal is a legal process regulated by the Bankruptcy and Insolvency Act of Canada. It is an alternative to declaring bankruptcy and can only be completed with the help of a Licensed Insolvency Trustee (LIT). In most cases, a consumer proposal will include the following debts:

  • Credit card debt
  • Department store credit debt
  • Unsecured loans
  • Outstanding bills
  • Overdrafts
  • Phone bill debt
  • Medical bill debt
  • Debt from collection agencies
  • Bank loans and personal loans
  • Payday loans
  • Tax Debts
  • Certain student loans

If you are unsure whether or not your debts would be included in a consumer proposal, it is best to speak with a licensed insolvency trustee. They will be able to review your specific situation and guide you in the consumer proposal process.

Secured Debts

Secured debts are those that are backed by some form of collateral. For example, when you take out a car loan, the car itself is the collateral. This means that if you stop making payments on the loan, the lender can seize the vehicle to recoup their losses.

Other common examples of secured debts include mortgages, vehicle lease agreements, and home equity loans. The lender can seize the underlying asset if you stop making payments. This is why it's so important to carefully consider your options before taking out a secured debt - if you can't afford to make the monthly payments, you could lose your home or car.

A consumer proposal can help people who have secured debts because the proposal will usually involve making monthly payments to the creditor. This will help to keep the individual in good standing with the creditor and stop any legal action from being taken. In addition, a consumer proposal will also prevent any wage garnishments or asset seizures from taking place.

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Student Loans

A consumer proposal can also cover student loans, provided that you are out of school for seven years. A consumer proposal helps with Student Loans by consolidating the debts into one monthly payment. This makes it easier for the person to manage their finances and stay current on their Student Loan payments.

A consumer proposal helps with Student Loans by stopping wage garnishments and creditor calls, freezing interest rates, and creating a manageable monthly payment plan.

CRA And Tax Arrears

The Canada Revenue Agency (CRA) is a government agency responsible for administering tax laws in Canada. Tax arrears are past due taxes and have not been paid to the CRA.

If you have unpaid taxes, the CRA may take enforcement action to collect the debt. This could include garnishing your wages, seizing your assets, or placing a lien on your property. On the other hand, if you are unable to pay your taxes in full, you may be able to arrange a payment plan with the CRA.

A consumer proposal helps with CRA And Tax Arrears by providing a negotiated settlement of your debts. This can be an attractive option for those who cannot pay their debts in full, as it allows you to pay back what you owe over some time while also stopping any interest or penalties from accruing. Additionally, a consumer proposal will stop the CRA from garnishing your wages or seizing your assets. This can be a huge relief for those struggling to make ends meet, as it gives them some breathing room and allows them to focus on getting back on their feet financially.

Payday Loan Cycle

Most of our consumer proposal clients are under the payday loan cycle, and most of them are connected to multiple loans. A consumer proposal will help stop the calls and harassment from payday loan companies and the wage garnishments. It will also help to lower your interest rates and could result in a lump sum payout at the end of the process.

High-Interest Installment Loans

High-interest installment loans are short-term, high-interest loans that allow you to borrow a fixed sum of money over a specified period. Unlike payday loans, which must be repaid in full on your next payday, high-interest installment loans allow you to repay the loan over time in fixed installments. This makes them a more affordable option for borrowers who need to borrow money for a more extended time.

High-Interest Installment Loans can be helpful for people who need money quickly but don't want to borrow money from family or friends. They can also be helpful for people who have bad credit and are unable to get a loan from a bank. However, as the name suggests, these are loans with high-interest rates. They typically charge between 39% and 48% interest.

If you are struggling with high-interest installment loans, it is important to seek help as soon as possible. A consumer proposal is one option that may be available to you and can provide relief from your debts.

Pros and Cons of Canada’s Consumer Proposal Plans

The Consumer Proposal plans in Canada have both pros and cons. On the one hand, they offer an excellent way for people to get out of debt without declaring bankruptcy. They can help people keep their homes, cars, and other possessions while getting their finances back on track. However, Consumer Proposals also come with some drawbacks. For example, they can be expensive to set up and maintain, and they may not be available to everyone.

Overall, consumer proposals can be helpful for some people in difficult financial situations. However, it's important to understand the pros and cons that come along with it.

Advantages of a Consumer Proposal

  • No upfront fees! Our initial consultation is free, and so is the filing of your consumer proposal
  • Creditors will no longer be able to harass you
  • Bank accounts will no longer be frozen
  • Wage garnishments will stop
  • You can reduce the total amount of debt you owe by up to 80%
  • You will only have one low monthly payment each month
  • You get to keep all of your assets

Disadvantages of a Consumer Proposal

There are a few disadvantages to consumer proposals. First, they are not as well-known as debt consolidation loans or bankruptcy, so some people may not be aware of them. Second, they can be more time-consuming and complicated to set up than other options. Finally, they are only available to people who have a steady income and good credit score.

Other disadvantages include:

  • A consumer proposal will damage your credit score and remain on your credit report for up to seven years. This will make it more challenging to obtain a car loan, mortgage, or even a cell phone plan in the future.
  • All of your assets become part of the proceedings when you file for bankruptcy. With a consumer proposal, you are able to keep some of your assets (depending on how much money you owe).
  • If you have a particularly large debt that you cannot pay off within five years, a consumer proposal may not be the best option for you.

How Does a Consumer Proposal Affect Your Credit?

If you are considering a consumer proposal in Ontario to deal with your debt, you may be wondering how this will affect your credit.

A consumer proposal is a legal process that is administered by a Licensed Insolvency Trustee (LIT). It is an alternative to filing for bankruptcy and can provide relief from your unsecured debts. The impact a Consumer Proposal has on your credit score will vary depending on several factors, including the particulars of your case and your overall credit history. However, in general, filing for bankruptcy (including through a Consumer Proposal) will have a negative impact on your credit score.

While a Consumer Proposal can hurt your credit score, it is important to remember that this is often only temporary. As you make payments under your proposal and successfully complete the terms of the agreement, your credit score will gradually improve. This process can take several years, but eventually, you should be able to rebuild your credit and regain financial stability. In fact, many people find that their credit score improves after completing a Consumer Proposal.

If you are considering a Consumer Proposal vs bankruptcy, speak to a licensed insolvency trustee today to learn how it could affect your credit score and whether it is the right solution. With our help, you can make an informed decision about your financial future.

How Does a Consumer Proposal Work?

When you can't pay your debts, a trustee may be appointed to help you through a consumer proposal. A trustee is an impartial person appointed by the court to administer a consumer proposal.

A consumer proposal is a legal process where a person who is unable to pay their debts proposes a plan to their creditors to repay a portion of what they owe. The proposal must be accepted by at least two-thirds of the person's creditors (by dollar value), and the court must also approve it.

If the proposal is accepted, the debtor makes monthly payments to a licensed trustee, who then distributes the money among the creditors. The repayment period can be up to five years, and if all payments are made as agreed, any remaining debt is discharged at the end.

A consumer proposal is different from personal bankruptcy. A bankruptcy filing makes all of your debts go away, while a consumer proposal allows you to keep some or all of your debt and usually results in lower monthly payments.

Repayment Plan

When you file a consumer proposal, your trustee will work with you to create a repayment plan. This repayment plan will outline how much money you will pay back each month and when you will be done repaying your debt. Your trustee may also suggest alternative payment plans if they feel that the proposed repayment plan is not feasible for you. Ultimately, it is up to the court to approve your repayment plan. If the court approves your repayment plan, you will be required to pay your trustee each month. Once you have made all of the required payments, your debt will be discharged, and you will be free from your creditors.

Paperwork and Documentation

When you file for a consumer proposal, many paperwork and documentation are required. If you cannot provide some of the documents, your trustee can help you gather the necessary information. Remember, it is important to provide as much information as possible to help your trustee make an informed decision about your proposal.

The paperwork and documentation for a consumer proposal usually includes the following:

  • A cover letter or proposal
  • The consumer proposal form
  • The statement of affairs
  • A financial statement
  • Proof of income (pay stubs, bank statements, T1 General)
  • Proof of expenses (mortgage or rent payments, utility bills, credit card statements)
  • List of creditors and balances owed to each creditor
  • Any other relevant documents specified by the trustee

Stay of Proceedings

If you have filed a consumer proposal, the court may order a stay of proceedings. This means that your creditors cannot take any action to collect their debts from you while the proposal is in effect. The stay of proceedings also applies to any legal actions that might be taken against you.

Voting and Approval

When it comes to voting on a consumer proposal, there are three possible outcomes: acceptance, rejection, or continuation. In most cases, the vote will result in either approval or rejection after 45 days of creditors’ review. However, if there is a tie vote between accept and reject, the proposal will continue. This means that the creditors will have an additional month to consider the proposal and make a decision. If there is still a tie vote at the end of that month, then the proposal will be automatically rejected.

Payments and Duties

When you make a consumer proposal, there are certain payments and duties that you must follow. These include making monthly payments to your trustee, attending credit counseling sessions, and abiding by the terms of your proposal. If you do not make your monthly payments or follow the other requirements of your proposal, your trustee can terminate it, and you will likely have to declare bankruptcy.

Debt Elimination

You will receive a Certificate of Full performance once the proposal payments are complete. This means that your debts have been eliminated, and you can have a fresh start in your financial status.

If you’re feeling overwhelmed by debt and don’t see a way out, it might be time to consider a consumer proposal. This is a formal process where you work with a Licensed Insolvency Trustee to come up with a plan to pay back your debts over time. You can still keep your assets and there’s no need for bankruptcy. Contact us today for more information or to schedule a free consultation. We can help you get started on the path to financial freedom.

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