Pro’s and Con’s of Consumer Proposal

Thousands of Canadians are choosing a consumer proposal as their debt management option because of the many benefits it offers. In this article we’ll go over some of the negatives and positives that come with filing one.

Would you prefer good or bad news first?

Let’s get the bad out of the way:

Con’s

  • If you’re credit score is not completely damaged it will suffer when a Consumer Proposal is listed on your credit bureau file. Although not as damaging as bankruptcy, you will have a hard time getting approvals for future unsecured credit.  It’s important to note that if you’re in a never-ending cycle of minimum payments your credit rating will eventually begin to suffer anyways.  Unless you have a real solution to your debt situation, the benefits of a Consumer Proposal often outweigh the temporary reduction in credit score.
  • You will not be able to seek new credit with creditors that are a part of the proposal (at least while proposal is being paid off).
  • You’re existing credit cards will be cancelled.
  • You will have to attend 2 credit counselling meetings.

Pro’s

  • You can negotiate to pay back only a portion of the debt you owe.  When creating a proposal to your creditors, you can work with your Administrator/Trustee to negotiate payment terms to repay less than what you owe.  Creditors will usually agree if it is more than what they would receive if you filed for bankruptcy.
  • Pay over 60 monthly installments.  You can negotiate to pay off the new (settled) amount over 5 years.
  • Your monthly payment never increases.  Even if your income increases or you come into money after filing a Consumer Proposal your monthly payment is set and will not increase.
  • Immediate stoppage of interest charges.
  • Collection calls from creditors stop.
  • All legal actions and claims against you are stopped.  If your creditors have filed lawsuits or made legal claims or actions, all these activities will be stopped.
  • You can retain/keep all of your assets.
  • Less damaging than filing for bankruptcy.  Comes off your credit report in a shorter amount of time and allows you to solve debt problems without going bankrupt.

A Consumer Proposal is an exceptional program for individuals, families and business owners who are facing financial hardship and need a practical solution to their debt problems. If that sounds like you, Click below to Schedule your free, no-obligation phone interview with a Consumer Proposal Administrator.

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