Consumer proposals in Toronto: A creative solution?

I meet with a lot of people in the Etobicoke office who have heard about consumer proposals but aren’t really sure what they are and what they can do for them and their financial situation.

Typically, a consumer proposal is a plan to pay back a portion of your debt through a contract with your creditors over a period of time.

So, how do you make contract with your creditors?

To start a consumer proposal, you will first sit down with a trustee and figure out how much money you can afford to pay to your creditors, or the people you owe money to. We will need to look at your income, budget, what you own, and who you owe money to.  This will help to determine a proposal or contract to present to your creditors, which will offer to pay a certain amount of money over a set period of time.

A copy of your proposal and other information is mailed to your creditors, who will then have 45 days to consider whether or not they will accept your offer. If a majority of your creditors vote in favour of the proposal, then you have a contract with your creditors.

There are many advantages to using a consumer proposal to handle your debts. You are able to pay back what you can over a set period of time instead of being harassed by bill collectors and collection agencies. And because it is a legal process, any wage garnishments will stop.

Consumer proposals are also a creative solution to your debt problems, in that there is more than one option when coming up with your proposal terms, as follows:

-Monthly payments over a period of time, but no longer than 5 years or 60 months, based on what you can afford in your budget

-One lump sum payment to your creditors

-A combination of monthly payments and a lump sum payment

For example, if you owed $50,000 in credit card debt, and you figured out you can only pay $30,000 of that debt, your proposal could be:

-Monthly payments of $500 over the course of 5 years, or 60 months

-A lump sum payment of $30,000

-A lump sum payment in the beginning, with the remaining amount being spread out over monthly payments

You might wonder how a lump sum payment is even possible. In the case of one of my clients, she has received an inheritance from her mother early, and is using that amount to make her one-time lump sum payment to her creditors. When she has made that payment, she will be debt free and able to start over financially. Obviously, each solution is not meant for everyone, but a consumer proposal could be the best solution for you and your situation.

If you think a consumer proposal might work for you, or if you have any questions about this or other solutions, contact me at 310-PLAN. We can set up a time for a free consultation, where we can review your situation and find the right solution for you. You can also email me any questions. If you want relief from your debts, contact me and let’s figure out a way to give you a fresh start.