5 Top Benefits of a Consumer Proposals Brampton

Residents of the Brampton region who are in dire financial straits may be able to find

a solution with a consumer proposals Brampton. This debt relief program is one of two

insolvency options offered by the Canadian federal government under the Bankruptcy

and Insolvency Act. Many people use it to obtain relief from creditors as well as take

advantage of its many other powerful benefits.

Avoid bankruptcy

One of the top benefits that a consumer proposal offers is that it will allow you to pay

off your debts without resorting to bankruptcy. It’s become a popular alternative to

bankruptcy as most people across Canada don’t want to go bankrupt. If you have total

debts that do not exceed $250,000 (this does not include your mortgage) and you

have the financial capacity to repay a portion of your debts, you can file for a proposal

instead of a bankruptcy. If the proposal is accepted by the majority of your creditors,

you can then be well on your way to getting your finances back on track.

Keep your assets

Another big advantage is that a consumer proposal can allow you to keep assets that

might otherwise be taken away when you file a bankruptcy. In bankruptcy, you are

required to surrender certain assets and only keep assets that are exempted as part

of the negotiations for you to be able to receive a discharge and be absolved from

your unsecured debts. In a consumer proposal, you are not required to surrender

anything and so you can keep your home, car, RRSP and other valuable possessions

while repaying your debt.

Protection from creditors

Once your consumer proposal is filed, an automatic Stay of Proceedings takes effect

to protect you from your creditors. This immediately puts a stop to all harassing phone

calls you may be receiving from creditors. This will also stop creditors from garnishing

your wages or freezing your bank accounts. The Stay will also put a stop to any legal

action taken against you, including the ones that are pending in court.

Lower your debt

A consumer proposal is basically an offer that you make to your creditors where you

present to them your terms of payment and let them know that you can only afford to

repay a portion of what you owe. A licensed insolvency trustee will draft the offer and

negotiate with your creditors on your behalf to reduce the amount of debt that you need

to repay. If negotiations are done right, you may be able to lower your debt by as much

as 80%.

Fixed monthly payments

In a consumer proposal, you pay a fixed amount every month that won’t go up even

if your income increases. In a bankruptcy, if your income increases, you are required to

pay surplus income which means you will have to pay more. As part of the bankruptcy

process, you will be required to submit all proof of income to your trustee every month

and the trustee will compute if you have any surplus income and determine how much

more you will have to pay.

Filing for bankruptcy should be your very last option when you have an excessive

amount of debt and have no way to pay your creditors back. Talk to a licensed insolvency

trustee and consider filing a consumer proposals Brampton instead as it may be just

what you need to get your finances back on track without going bankrupt.

Consumer Proposals in Toronto Can Help You Avoid Bankruptcy

Consumer proposals in Toronto can help you avoid bankruptcy and enable you to work out a formal agreement with your creditors to pay them a portion of what you owe them in full settlement of your debts. If your creditors accept your offer then your debts are significantly reduced to the amount you have agreed to pay them and your creditors are prevented from taking any legal action against you.

Consumer proposals are a much more favorable option compared to bankruptcy which lenders and financial institutions would often prefer a debtor to take. The arrangement benefits both parties. Creditors would rather you settle your debt by paying a reduced amount and get paid at least some of what they are owed, and you get to retain your assets and avoid drastically damaging your credit.

A consumer proposal is a legally binding process governed by the Bankruptcy and Insolvency Act. It is a formal agreement between yourself and your creditors that you will pay back a portion of the debt you owe at your own pace over a set period of time.

In recent years, consumer proposals have become a popular choice among highly-indebted Canadians. A big part of its popularity is the many advantages it offers, which can include:

• Eliminate unsecured debts for less than you owe
• Reduce your monthly payments;
• Keep your assets like your home or car
• Get immediate protection from your creditors
• Stop all legal action including collection calls and wage garnishments
• Avoid bankruptcy
• Allow you to start saving for your future

A consumer proposal is essentially a plan that can only be arranged and administered by a Licensed Insolvency Trustee (LIT). The LIT will develop an offer for your creditors to revise the terms of your debts, including negotiating a more affordable outstanding amount, payment schedule, and/or interest rate.

To put the plan in place, your trustee will first determine how much you can afford to pay back every month. He will take into consideration several factors, such as your living expenses and all your sources of income. Once he has determined the amount you can afford to repay, he will then set up how long your consumer proposal will last. He  can arrange the payment plan for three years or up to five years.

The plan is then proposed to your creditors. In order for the plan to take into effect your creditors will  have to accept the proposal. Creditors have 45 days to vote for or against your proposal. If majority of your creditors agree to your proposal (50%+1 based on the dollars you owe), then it is deemed to be accepted by all your creditors. If no one objects within 15 days following the acceptance, your proposal will be approved by the court. Once approval by the court is released, this starts the formal agreement and you and your creditors are bound by law to commit to the plan.

If majority of your creditors vote no against the proposal, it can be amended. Your trustee will call a meeting and you and your creditors can negotiate directly and come up with a fairer deal that both parties can accept.

For many people who don’t want to go bankrupt, consumer proposals in Toronto are a better debt solution. Speak to a Licensed Insolvency Trustee to make sure that it is an option that you can take to help eliminate your debt and gain control over your financial future.