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Consumer Proposals

consumer proposal services

Consumer Proposal (Debt Settlement Arrangement)

A Consumer Proposal, or debt settlement arrangement, is a settlement offer made by a person to his or her unsecured creditors to reduce the amount of debt owed. A Consumer Proposal will freeze the accumulating interest and allow you to make one monthly interest free payment to settle all of your debts. The amount you pay is typically only a portion of the total amount you owe. A Consumer Proposal can be filed by a person owing less than $250,000.00 (excluding a mortgage on your home).



Advantages

  • Repay significantly less than the amount of debt you owe
  • Offers flexible payment terms based on what you can afford to pay, with no interest
  • Make one monthly payment that deals with all of your debts including credit cards, lines of credit and income tax owing to the government
  • Immediately stops wage garnishments, legal actions and collection calls
  • Does not affect assets such as your home or vehicle - you simply continue to make the payments on these assets
  • Avoid the need to file for bankruptcy
  • Does not affect your ability to sponsor friends or family to immigrate to Canada
  • Better impact on your credit rating than if you declare bankruptcy

Disadvantages

  • A Consumer Proposal does have a negative impact on your credit rating, although not as bad an impact as a bankruptcy
  • Will require you to rebuild your credit rating to improve your ability to borrow again in the future

Credit Rating

Your credit rating is made up of several factors including job and residence stability, marital status and income. If you file a Consumer Proposal, the credit bureau will keep a record of your filing for a 3 year period after you have met the full terms of the Consumer Proposal.

Cost

Once the payment terms on your Consumer Proposal are set, there is no additional cost or other fee to be paid.

Basic Conditions for a Successful Consumer Proposal

A Consumer Proposal generally requires that you have some surplus income in your household budget to allow for a single monthly payment, and that your family income is stable. The payments you make under the Consumer Proposal are then divided among your unsecured creditors.

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