A consumer proposal is one of the alternatives for filing bankruptcy, but there are many things to remember before filing it. Before knowing when to file a consumer proposal, let’s understand what a consumer proposal truly is. A consumer proposal is an alternative to filing for bankruptcy for the citizens of Canada. It is the process in which you close a legally binding agreement with all of your creditors with the help of a mediator.
To be precise Consumer proposal prevents you from filing bankruptcy without losing control over your assets, while your creditors agree to accept a lower amount than what you owed them. In Canada, states such as Calgary, Edmonton, or Lloydminster, have seen many cases of filed consumer proposal.
What are the situations when you should consider opting for a consumer proposal?
Some of the situations when one should consider opting for a consumer proposal are mentioned below-
1. Your debt is unstable and out of control
Debts are generally beneficial but, if not handled properly, can cause massive problems. For example, if you decide not to pay the month Emi of your debt for some reason, an extra charge will be added to the existing value, making it larger than before.
If this kind of case goes on, it’s challenging to regain control over your debt. If you are having trouble maintaining these debts, you can contact professionals. One of the solutions in this matter is to use the consumer proposal of Canada.
2. Shortage of money due to which you can’t pay off your debts
Generally, for getting accepted by the consumer proposal, you should not have assets worth your debt. This means that the value of your assets must not be more than your debt. If you get accepted, unlike in bankruptcy, you won’t lose control over your assets. You and your trustee can use the consumer proposal to propose a period within which you can pay off some portion of your debt.
3. If you can pay some percent of your debt
If you are willing and capable of paying some part of your debt, then a consumer proposal might be your best option. With the help of a consumer proposal, you, along with your trustee, can propose an amount you will be able to pay in a particular amount of time. One thing to note is that the maximum time you can take is five years.
Even though consumer proposal has the edge over bankruptcy, there is still one central point where consumer proposal fails to outshine bankruptcy, and it’s the time aspect. Filing for bankruptcy is fast, while consumer proposal is just the opposite. If you live in Alberta, then there are many companies providing Bankruptcy services in Alberta that you might like to know about.
Consumer proposal has many advantages over bankruptcy, which most people opt for. Many companies all over Canada provide different services relating to Consumer proposals; Credit 720 is one of those companies.