Advantages and disadvantages of consumer proposals: Introduction
In this vlog, we answer the question “What are the advantages and disadvantages of consumer proposals?”.
Advantages and disadvantages of consumer proposals: Who is it for?
A Consumer proposal is a part of the Bankruptcy and Insolvency Act (BIA) found in Part III Division 2 of the BIA. It is available for people who do not owe more than $250,000 to their creditors, NOT including any mortgages or other loans registered against a principal residence.
The first test is being insolvent? What I mean by that is:
- are your financial obligations greater than the worth of your property?
- if you sold your assets you would not have enough funds to settle your financial commitments totally
- you are having problems making the total required payments to pay off in full each of your financial commitments monthly
Advantages and disadvantages of consumer proposals: The Advantages
If so, then teaming up with a licensed insolvency trustee (LIT) acting as your consumer proposal administrator, the advantages are:
- Pay your creditors part of what you owe them over a period not greater than 60 months.
- Broaden the time you can use to pay off your financial debts.
- Stop the interest clock.
- Make monthly payments to the LIT for the benefit of your creditors that you can afford within your budget.
- If successful, you get to keep your assets.
- If successful, the cost of your consumer proposal can be thought of as being free. The BIA sets the fee of the LIT. The amount of payments you must promise to make to get your creditors to vote in favour ignores the fee of the LIT in performing that calculation.
- Remain free from bankruptcy.
You should think of a consumer proposal as obtaining an interest-free loan to combine your debts, pay only a part to get rid of them all. Your interest-free loan can have a term of no longer than 5 years.
Advantages and disadvantages of consumer proposals: The Disadvantages
There are not many disadvantages to a consumer proposal. The only one I can think of is that it is an insolvency proceeding under the BIA, so it will be and stay on your credit record for some time. But if you have so much debt you don’t know where to turn and you can’t pay it off, then your credit score has probably already taken a hit.
Get started now to gain back control of your life
If you’re thinking of a consumer proposal as an option to deal with your financial debts, telephone Ira Smith Trustee & Receiver Inc. now.
Our method is to set up an outcome for you where Starting Over, Starting Now becomes a reality, beginning the minute you walk through our door. You’re simply one telephone call away from leading a healthy, balanced and stress-free life again.
