Can a Consumer Proposal Help Your Family Finally Get Out of Debt?

Your family is not alone if you’ve been feeling financially constrained lately. Almost everyone is feeling the pressure caused by higher grocery prices and unaffordable housing costs, whether they rent or their mortgage is up for renewal. Across the country, Canadians are facing an affordability crisis unlike anything seen for generations.

With so many households struggling to keep up with out-of-control costs, Canadians have also seen their debt levels skyrocket. People are increasingly relying on credit cards, lines of credit, and payday loans to keep up with their bills. Unfortunately, relying on credit can only work for so long before you max out your credit cards or can’t keep up with debt payments.

Getting Help with Insolvency

Insolvency doesn’t necessarily happen overnight or even dramatically. Often, it’s a gradual process where you find yourself deeper in debt, running out of savings, and incapable of meeting your debt obligations.

Insolvency is the term used to describe a situation where you cannot meet your debt obligations when they become due.

When you become insolvent, debt relief options open up, including consumer proposals. A consumer proposal is an alternative to bankruptcy that can make it much easier for you to get out of debt. Learn about consumer proposals and the difference they can make when you’re struggling with debt.

Are You Eligible for a Consumer Proposal?

First, you should know the eligibility criteria for filing a consumer proposal:

• You are insolvent, which means that you cannot meet your debt obligations on time.
• You owe less than $250,000 in unsecured debts (i.e., not including mortgage debt).
• You have a stable source of income that allows you to make monthly payments to your creditors.

What Does a Consumer Proposal Do?

A consumer proposal will help make your debt more manageable in several ways.

• A consumer proposal will reduce the total amount that you owe. The reduction can be as much as 80%, depending on how much you owe and your financial situation.
• You have up to five years to pay off the remainder of this debt. You will pay it off in regular monthly payments.
• Interest charges do not accumulate on these debts. You only pay the principal.
• Collection actions such as wage garnishments also stop, giving you more control over your financial situation.
• The consumer proposal will appear on your credit history. It will remain there until three years after you have paid off the remainder of your debt.

How Do You Get a Consumer Proposal?

You can only file a consumer proposal with the help of a Licensed Insolvency Trustee. A Licensed Insolvency Trustee will start the process with a free consultation where they overview your financial situation and explain your different options.

If a consumer proposal is the right option, they’ll help you determine a fair monthly payment. The ideal monthly payment is one that:

1. You can afford to pay each month with your income and expenses.
2. Your creditors are likely to accept, as they will vote on whether or not to accept it.

Trustee firms are the best place to start if you need debt help. A consumer proposal can get you out of an unsustainable situation and help your family finally get out of debt.