Staying in debt for a long time can be awful. Not only does it hamper financial management, but also puts unduly mental pressure on the one under it. Thankfully, certain options for debt forgiveness can be used to get rid of it.
Out of many debt forgiveness options, the consumer proposal is a promising one. It is a sort of legal arrangement with creditors that allows the person under debt to settle the debts for less than the overdue amount. It can be filed via a Licensed Insolvency Trustee.
If you are in debt that you cannot pay back, use this debt relief strategy.
Here are a few reasons you should consider a consumer proposal.
Reason #1: You can’t Repay all your Debts
Needless to say, the very first reason you should consider a consumer proposal is when you are short of money to clear your debts. You can neither pay the debts before their due date nor do you have enough assets to pay them back.
In this case, you can reach out to a Licensed Insolvency Trustee and chalk out a debt repayment plan. They will help you fabricate a realistic plan to make the payments. You will get a maximum time of 5 years to clear your debts. However, your creditor will have the option to refuse the proposal.
Reason #2: You can Repay Some of your Debts
If you are still in the position to repay at least a part of your debt and wish to repay everything, consider a consumer proposal.
If you have a steady source of income and believe that you can repay your debt, devise a repayment plan with your trustee that fits your situation and needs and pay back over an extended period (maximum 5 years).
With this option, you can repay the debt at your own pace without subjecting yourself to pressure.
Reason #3: Your Debts are Piling On
“Piling on” of debts can be horrible. It pushes you off the track in terms of financial management and puts a lot of stress on your head.
If “piling on” of your debts sees no end, you can use the consumer proposal to get things back in your hands.
Reason #4: Bankruptcy is on the Brink
Bankruptcy is often seen as the last respite for people who can’t pay their debts. But consumer proposals are a lucrative alternative to bankruptcy. Unlike bankruptcy, in the consumer proposal process, you don’t have to report your monthly income and give a detailed account of your financial records to the trustee. Additionally, you don’t have to liquidate your non-essential valuable assets and pay your creditors.
If your creditor accepts the consumer proposal, you can make monthly payments. You don’t have to part ways with your prized assets.
Reason #5: It Stops Collection Activities from the Creditors
Wage garnishment and collection activity from creditors can get on the nerves. A good way to put this to an end is by filing a consumer proposal.
Once you file the consumer proposal with a Licensed Insolvency Trustee, you can legally shield yourself from all the garnishment and collection activity.
The Bottom Line
If you think declaring bankruptcy is the only option to release yourself from the burden of debts, think twice. Bankruptcy is a big step and comes with certain challenges that taint your future for at least a few years.
Instead, use a consumer proposal as your respite. Now that you know why a consumer proposal is a better option for debt repayment as compared to declaring bankruptcy, reach out to a Licensed Insolvency Trustee and plan your debt repayment strategy.
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