Are you faced with overwhelming debt that you can no longer manage by conventional means such as reducing spending, selling off some things you own, or renegotiating the terms of your debt payments? Debt that can no longer be managed by means such as reducing household expenditures, selling belongings for extra cash, or restructuring the way you pay your debts for improved liquidity may need a Lethbridge consumer proposal. How do you know if this legal debt relief method is right for you? Here is some consumer debt proposal information for Canadians to help you decide:
What is a Consumer Proposal?
A consumer proposal is an agreement between you and your creditors regarding the payment and settlement of your debts. This agreement is a legally binding one drafted by a bankruptcy trustee and agreed to by a majority of your creditors that allows you to pay a portion of your total debt over a pre-determined period of time. Because it can be a complicated process, the Bankruptcy and Insolvency Law requires that you work with a licensed bankruptcy trustee. Prior to the consumer proposal taking effect, a majority of the creditors involved need to approve it.
What are the Advantages of a Consumer Proposal?
There are many advantages to a consumer proposal as a means of debt relief. These are:
- An immediate halt to any and all collection activity, including phone calls and letters from creditors and wage garnishments. A consumer proposal affords the you legal protection against these actions.
- The retention of your home and various valuable assets, which may otherwise be taken away for liquidation in bankruptcy.
- No more accumulation of interest and other peripheral fees on your debts.
What are the Qualifications for a Consumer Proposal?
There are certain criteria for the approval of a consumer proposal application, such as:
- A debt amount in the range of $5,000 to $250,000. This amount excludes home mortgages.
- Current employment and the ability to generate enough income so that you can pay the agreed amount towards your debt every month.
There are many things you should consider before you talk to your licensed bankruptcy trustee and apply for a consumer proposal. This legal agreement and debt relief action also comes with disadvantages such as a credit score downgrade, the repayment of all debts contained in the proposal, and the continued obligation to pay other debts (child support, alimony, car loan payments, and mortgage payments) in their entirety. Set up a meeting with a bankruptcy trustee in Lethbridge so you can appraise your circumstances and discuss consumer debt proposal information for Canadians prior to developing your financial strategy.