Consumer Proposal Cost: A way for you to save money
Table Of Contents
- How Much Does A Consumer Proposal Cost?
- The payment amount for your Consumer Proposal
- Who is responsible for Negotiating Consumer Proposal Payment Terms?
- Modifications in Proposal due to change in Financial Situation
- Non-Financial Effects of Filing a Consumer Proposal
- The payment structure of a Consumer Proposal Administrator (Trustee)
How Much Does A Consumer Proposal Cost?
When you are struggling with debt, the options can seem endless. You can try to negotiate with your creditors yourself, but that can be difficult and time-consuming. You could also hire a debt settlement company to help you out, but those services can be expensive. Another option is to file for bankruptcy. But before you do any of those things, you should consider filing for a consumer proposal.
A consumer proposal is a debt repayment plan that is administered by a licensed insolvency trustee. It is an alternative to declaring bankruptcy and allows you to repay your debts over some time (usually five years). During this time, interest on your debts will be frozen, and you will make monthly payments to the trustee. Once your creditors accept your proposal, they will not be able to take any further action against you.
A consumer proposal can give you up to 70% - 80% savings. But, exactly how much do you pay in a consumer proposal?
The payment amount for your Consumer Proposal
There is no one size fits all answer to how much you need to pay for your consumer proposal. The cost will generally depend on several factors, including:
- Your income
- Your assets
- The total amount of debt owed
- Number of creditors
- Terms of the proposal
A consumer proposal is a practical debt relief option for those who find it hard to settle their debts. It offers up to a 25% reduction in the principal repayment of the original debt, which is already a significant amount for those with limited resources.
For instance, a client has $40,000 debts from different creditors and chooses to file a consumer proposal. A licensed insolvency trustee will help the client develop the best payment plan and be approved by the creditors. Usually, the settlement can go as low as $14,000, giving the client a monthly proposal payment of $233 only for 60 months.
Who is responsible for Negotiating Consumer Proposal Payment Terms?
A consumer proposal is a legally binding agreement between you and your creditors to repay your debts.
A licensed insolvency trustee will negotiate with your creditors on your behalf to reach an acceptable agreement to both parties. If an agreement is reached, the terms of the repayment plan will be set out in a consumer proposal document. If your creditors do not agree to the terms of the consumer proposal, the administrator will notify you, and you can choose to either continue negotiating with your creditors or file for bankruptcy.
If your proposal has been approved, you must make monthly payments to the trustee for up to five years. A lump sum option for the cost is also available to match your pay period. You can also pay in advance if you’re able to. The trustee will then distribute the money to your creditors, and any leftover funds are returned to you. If you can't keep up with your payments, the administrator may ask the court to terminate your proposal.
Keep in mind that consumer proposal payments are a legal obligation and not voluntary. Therefore, you should never miss a payment or attempt to renegotiate the terms on your own.
Modifications in Proposal due to change in Financial Situation
If your financial situation changes while you're under a consumer proposal, you'll need to notify your trustee as soon as possible. Your trustee will then work with you to modify the terms of your proposal, if necessary. For instance, if you’ve negotiated for smaller payments but have seen a great improvement in your financial status, you can ask your trustee for term modification. You’ll have larger payments until the end of the proposal.
However, if you have more debt or less income, your trustee may propose a different payment plan that fits your new circumstances. In some cases, you may be able to renegotiate the terms of your consumer proposal with your creditors. If you cannot reach an agreement, the trustee may recommend that the court terminate your consumer proposal. You will then be responsible for repaying your debts in full.
Non-Financial Effects of Filing a Consumer Proposal
There are a number of non-financial effects that can result from filing a consumer proposal. You may find that you are able to save money on interest payments now that you are on a payment plan as part of your consumer proposal. The stress and worry of having debt hanging over your head can be alleviated, and you may have more time available to focus on other areas of your life since you will no longer be dealing with debt collectors and calls.
There are a few consequences of filing a consumer proposal that you should be aware of. First, your credit score will likely take a hit. This is because a consumer proposal is a type of debt relief, and creditors generally see debt relief as negative, but only temporary. Once you have completed the term, you can rebuild your credit score.
Second, you may have trouble getting new lines of credit or loans after filing a consumer proposal. This is because creditors will view you as a high-risk borrower. Finally, you will be required to make payments to your trustee for five years. If you miss any payments or default on your proposal, the consequences can be serious, including having the proposal annulled and being declared bankrupt.
Payment structure of a Consumer Proposal Administrator (Trustee)
A consumer proposal administrator, or trustee, is paid in several ways. First, they are paid a flat fee by the person filing the consumer proposal. Second, they are paid a percentage of the total debt that is repaid through the consumer proposal. Finally, they are paid a commission on any payments that are made to creditors through the consumer proposal. All these are set by legislation and must be approved by the court.
We have a long list of satisfied clients at our firm. We value honest pricing and excellent customer service above all else. If you work with our trustees, expect no set-up fees, no minimum fees, and no additional fees on your monthly payment.
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A licensed insolvency trustee is the best option for those who are struggling financially. Our trustees are experienced and qualified to help individuals and businesses through difficult times. We understand that everyone's situation is unique, so we offer tailored solutions that meet each client's specific needs.
We're here to help you get back on your feet, so call us today to schedule a free consultation. We look forward to helping you through this difficult time.