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Sunday 16 Jun 2024

A Consumer Proposal
Donna Baxter

A Consumer Proposal means not only consolidating your debt, but also a way of reducing the debt amount must you be repay to creditors. A Consumer Proposal, in Canada, is an agreement to repay a specific amount of your debt. Often, the agreement forgives future interest on residual debt, too.

By filing a Consumer Proposal, you can stop interest on your loans as well as protect your assets, such as your home, car and, above all, save yourself from irritating calls from collection agencies.

A Consumer Proposal is a negotiated settlement; it legally binds you and your creditors. By agreeing with such proposal, you make one monthly payment for a specified period, usually more than five years. Your creditors receive a share of each monthly payment. After your final payment, you’re clear of all debt indicated in the Consumer Proposal; in many cases, debtors repay less than they owe. Thus, a Consumer Proposal is often less expensive than repaying debts on your own.

In Canada, a Consumer Proposal is a Debt Consolidation Loan. It’s a common way of solving debt problems and a prominent debt reduction strategy. With a consolidation loan, you bring the debts into a single monthly payment; the loan is always as manageable and available from various financial institutions, including banks and private lenders.

The consolidation loans come with various advantages and disadvantages. To know more on debt consolidation here you can get some useful facts about it and if needed can seek professional assistance. A big advantage of Debt Consolidation Loan is as you have to pay by one monthly installment, the rate of interest in this case is lower than the interest what you had to pay previously on different debts. Moreover, you can be sure that if you make all the monthly payments in a disciplined manner, it will leave no negative impact on your credit rating. The major disadvantage of such kind of loan is for securing the loan there is a common need for collateral.

In Canada, there are many options available for those having financial problems. For unmanageable debt, many choose Consumer Proposal, as an option to deal with the situation. Consumer proposals come as a proactive solution for dealing with debt problems. A Consumer Proposal allows you to take charge of your financial problems and propose a settlement with the creditors.

By means of this negotiated settlement, a Consumer Proposal, you only need to pay a portion of your total debt each month; the interest rate on your debts is frozen when you file for the Proposal. A Consumer Proposal comes in the picture when any individual or business brings in less income than when they took the credit. Many factors, such asjob loss, loss of contracts, business failure, disability or divorce, may be the reason behind such a situation. In other cases, the amount of debt becomes unmanageable and a person or business is capable of making only minimum monthly payments and needs a debt relief.

A Consumer Proposal is a great way offering debt relief because, as soon as the proposal is accepted, the creditors must stop all enforcement actions, immediately, Enforcement actions include wage garnishments or frozen bank accounts. To decide if a Consumer Proposal is the option for you and to know more on debt consolidation, you need to consider your personal circumstances and review your liabilities, assets and budget; these steps will help lead you to the right decision.

With bankruptcy, you run the risk of losing your certain assets and tax refund. You can also lose equity in your house, depending where you live Canada. A Consumer Proposal doesn’t involve the threat of losing your assets or tax refund.

A big advantage of Consumer Proposal compared with bankruptcy is you pay a fixed amount and it does not increase. In bankruptcy, as your income increase so do your payments.

To ensure a Consumer Proposal is the best way of dealing with debt, you can consult with a debt consolidation expert. She or he can assess your situation and offer you the best, impartial advice.

Find out more about debt consolidation here.

Donna Baxter writes and finance and related matters, especially to help consumers with financial issues and debt consolidation.

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