Why a Consumer Proposal Makes Good Sense

Why a Consumer Proposal Makes Good Sense

When debt accumulates to a point where it is difficult to manage even your minimum monthly payments, something has to give. Most people that find themselves in a situation where they are drowning in debt and want to pay their creditors. Sometimes creditors will demand payment in full or monthly payments that are beyond your ability to pay and negotiating with them becomes futile.

The creditor may decide to take collection action against you and send your account to a collection agency and then the really aggressive collection action will begin. The collection agency may phone you several times per/day, write to you or your employer and if authorized can even initiate a Small Claims Court action against you.

So how can you honour your obligation to your creditors with your means? The answer to this question may be through a consumer proposal.

A consumer proposal will enable you to propose a monthly repayment plan to your creditors that fits within your monthly budget.

A consumer proposal is something that must be administered through a licensed trustee in bankruptcy. The trustee will work with you to see if a consumer proposal is the right solution and then help you to formulate a proposal that is likely to be accepted by your creditors. The trustee will then make the proposal to your creditors. If the creditors accept the proposal (which in many cases they do), it is bound. You will then make a monthly payment to the trustee who will disperse the payments to your creditors. Generally consumer proposals are negotiated over a four or five year term. A consumer proposal can be repaid in full at any time and the faster the better.

Where an individual has the ability to raise a lump sum of money, they can make an “informal” proposal to their creditors through a trustee in bankruptcy and which if accepted, will settle the debt once and for all.

A consumer proposal is removed from your credit report 3 years from the date it is paid in full so the sooner you can pay of your proposal, the sooner you can begin rebuilding your credit.

Consumer proposals make good sense because they provide you with an avenue to make a deal with your creditors that will stop collection action and provide you with a fresh opportunity to set your finances back on track and deal with your debt.

If you would like more information about consumer proposals please contact Albert Gelman Inc. at 416-504-1650.