How Does a Consumer Proposal Take Care of Debts?
Extreme debt can slowly catch up on you. You might be expecting for a new job or a bonus. But in the time being, your debts are adding up. It will not be long enough that you will find yourself in a financial crisis. Such a crisis is something that happens to a lot of people.
When you have reached this point in your life, you might think that filing for bankruptcy is your only option. However, that is not the case. There are a number of ways that may help you get out of your financial problems aside from filing for bankruptcy.
One of the best options is a consumer proposal in Nanaimo.
What is a Consumer Proposal?
A consumer proposal is a legal agreement between you and your creditors to repay part of the debt that you owe. It is proposed to your creditors through a bankruptcy trustee as a different option instead of declaring personal bankruptcy. The trustee will be the one to propose how much you will pay based on what you own and on your income. What’s great about consumer proposal is the potential of considerably reducing the amount of debt you can pay to your creditors.
Only a Licensed Insolvency Trustee or LIT can oversee a consumer proposal. Your Licensed Insolvency Trustee will be the one to negotiate with your creditors. After which, a fixed settlement will be reached that’s legally binding. A consumer proposal doesn’t only give you the flexibility but also a number of helpful benefits like legal protection from your creditors, reduced overall debt load, keeping your assets and stopping wage garnishments.
However, there’s one key component in a consumer proposal. It will come down to the amount your creditor will likely get if you bankrupt. If that amount is much lower than the consumer proposal, then your creditor will most likely accept it.
In some cases, people who opt for consumer proposal had their debts reduced to as much as 80%. But, in a consumer proposal, you must have the capability to pay the negotiated monthly dues.
It should also be noted that after reaching an agreed amount, it is fixed and cannot be changed. And you can keep your assets if you want to.
A typical consumer proposal can last between 3 to 5 years. However, you can have the option to pay it earlier with no additional charges.
So if you are in a financial bind, don’t go directly for bankruptcy in Nanaimo. There are a lot of good alternatives that can help you, and one of them is a consumer proposal.
