The rise in Debt traps indicates how people are undergoing a financial crisis. It has thus become important to deal with debt traps by taking some measurable initiatives like debt consolidation.
What is Consumer Proposal
It is a highly legal process that involves a debt binding settlement agreement that is filed under a fully licensed insolvency trustee. This process includes payment of a percentage of your debts to the creditors in exchange for the forgiveness of your full debts.
Note that your payment is solely based on the debt negotiation between the creditor’s expected amount to be received and the amount that you are capable of repaying. Once you file in for a consumer proposal, your Licensed Insolvency trustee will be having a meeting with you to know about your current financial situation and will thereby suggest you the amount to be offered.
Various aspects of a Consumer Proposal:
Administered only by a licensed insolvency trustee, this settlement agreement towards the creditors cost around $1500.00 to be filed. The initial fee structure is to be managed totally by you. In case your settlement agreement is accepted by your respective creditor then you will also have to pay the further fees to proceed with the procedure.
Note that in addition to the initial costs, the trustees will also demand a section of your fee payment ranging to about 20% for managing and going through the details of your financial status. For the confirmation of the legal process, it is important that your creditors agree with the settlement proposal. Once it is confirmed, you need to repay the amount that is decided over a period of 5 years in maximum. This will add a permanent public record in the online database.
Will the creditors accept your proposal?
Another important question that could arise your mind is whether your creditors will accept the proposal or not. Note that every creditor has a different set of policies that they follow and hence not all creditors are prone to accepting your consumed proposal. This decision might depend on your current income levels and also the number of assets that you own. These factors could definitely influence the decision of your creditors.
How does Consumer Proposal provide Debt relief?
A consumer proposal is a legal agreement that takes into account all the unsecured creditors and eliminates all the possible debts that are considered to be unsecured. These unsecured debts basically include:
- Some of the student loan debts
- Loans from bank
- Credit loans
- Tax-related loans and payday loans
Note that a consumer proposal does not have any effect on the mortgage on your secured car loan or on your residence.
In this way, a consumer proposal helps benefits numerous people while they struggle with the repayment of huge debts. Having a debt settlement with your creditors through your licensed insolvency trustee could definitely help reduce your financial stress. Credit720 is a name you can always rely upon. They provide the best solutions for personal credit counselling services, necessary help required for filing consumer proposals and many more.