Consumer Proposals Are A New Alternative To Bankruptcy
February 23, 2018 (Investorideas.com Newswire) When you're in over your head in debt, the first thing you think of is the threat of going bankrupt. A bankruptcy can be rough – while people generally no longer lose their homes and their personal belongings are protected, you can lose equity in your home as well as property besides your primary residence. But bankruptcy is not the only way to get out yourself out of debt that you can't pay.
In the 1990s, Ontario introduced a new way to handle insolvency. It was designed for people who had consistent incomes but were too deep in debt to pay it off. Rather than liquidate their assets and use the proceeds to settle their debts, the new process protected debtors from accumulating interest and allowed them to pay off smaller amounts than they owed every month. The process is called a Consumer Proposal in Ontario and it provides significant debt relief without forcing you to part with any of your assets.
Consumer Proposals in Ontario are available from Licensed Insolvency Trustees. Toronto Licensed Insolvency Trustees David Sklar & Associates describe the Consumer Proposal process like this:
- The first step is a financial assessment by a Licensed Insolvency Trustee to find out whether you're eligible for a Consumer Proposal in Ontario. The sooner you do this, the better.
- If you're eligible, a Licensed Insolvency Trustee will then find the amount you can afford to pay each month to pay back your debts.
- The Licensed Insolvency Trustee will file the Consumer Proposal and your creditors will vote on whether or not to accept it. They do not have to accept it, but a fair proposal will probably be accepted.
- Interest stops accumulating on your debt and you pay back a portion of it in monthly payments directly to your Licensed Insolvency Trustee, who manages payment to your creditors.
In 2000, only 6.4% of insolvency cases in Canada were resolved with a Consumer Proposal. As awareness about Consumer Proposals increased, that rate jumped up to 47.9% in 2015. Thanks to Licensed Insolvency Trustees like David Sklar& Associates, more Canadian consumers are discovering a better way to get out of debt. A Consumer Proposal in Ontario is easier to manage, protects your assets, protects you from interest payments going out of control, and lets you rebuild your finances.
If you're facing insolvency, it's important that you learn the differences between Consumer Proposal and bankruptcy. Besides the fate of your assets, there are some other important differences.
- On a job application, a Consumer Proposal is not the same as bankruptcy, which is an important distinction if you work in finance, law enforcement, and security, where bankruptcy is not allowed or hurts your chances of getting and keeping a job.
- If you inherit money or your income increases after your Consumer Proposal is agreed upon, your agreement doesn't change. You may want to pay your agreement off sooner, but it is not mandatory.
- A Consumer Proposal only appears on your credit history for three years after you complete it, compared to 6-7 years after a (first-time) bankruptcy.
Consumer Proposals are the better way to handle insolvency. Talk to a Licensed Insolvency Trustee and get your life back on track.
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