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 and stop all interest.
A Consumer Proposal freezes interest and allows 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 the mortgage(s) on your home and your vehicle loan).
Consumer Proposal Advantages
In addition to borrowing/payment history, 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.
Once the payment terms on your Consumer Proposal are set, there will be no additional cost or fees. Your monthly payment terms will be tailored to your specific circumstances and will include a review of your income, assets, and total debt.
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 accumulate and are divided among your unsecured creditors at regular intervals over time (up to a maximum of 60 months or 5 years).
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