Consumer Proposal – An Alternative to Personal Bankruptcy

licensed insolvency trustee speaking to a couple about a repayment plan for their consumer proposal

The last couple of years has been incredibly hard on everyone, emotionally, physically, and financially.

Job loss and medical expenses are the leading causes of bankruptcy, severely disrupting individuals’ financial stability. Before seeking debt-relief options, many people try cutting back on their spending, though that’s easier said than done.

The most known debt relief option is filing for bankruptcy, though it’s not necessarily the best solution. It’s important to do some research about debt solutions before deciding to file for bankruptcy. There are better, less severe options available.

If you have more debt than you can handle but don’t want to file for bankruptcy, a consumer proposal may be the best solution for you.

What Are Consumer Proposals?

Many people seeking debt relief solutions are unaware of consumer proposals and their benefits.

This legally binding process administered by a Licensed Insolvency Trustee is a repayment plan formulated per the consumer’s ability to pay. Essentially, an agreement is made between you and your creditors to repay a percentage of what you owe in exchange for full debt forgiveness.

Though it rarely happens, creditors are not obligated to accept the proposal, in which case you’ll have to seek other debt relief solutions.

One of the biggest concerns people have when filing for bankruptcy is the number of assets they’ll have to give up. With consumer proposals, however, you’ll be able to keep all of your assets, including any equity in your home.

When to Choose Consumer Proposals Over Bankruptcy?

Though each situation is different, there are significant benefits to filing a consumer proposal rather than bankruptcy.

Depending on the size of your debt and your income, bankruptcy debt payments may become unaffordable. With consumer proposals, only a portion of your debt will need to be paid over an extended period, with the instalments not subject to change if your income increases.

Many people hesitate to file for bankruptcy due to the negative effect it’ll have on their credit score, making it difficult to land jobs in the future or take out a loan. While a consumer proposal will still affect your credit score, it will not be as severe and will be removed from your credit record in a few years.

Once a consumer proposal is filed, you’ll have legal protection against creditors and debt collectors, removing some stress and allowing you to take the proper steps to achieve a debt-free life.

If you have sizable assets such as a home or vehicle, a consumer proposal is often the better option, as they remain separate from your agreement and will not need to be surrendered.

Live a Debt-Free, Financially Stable Life With Lazard & Associates

Worried about how you’re going to pay off your seemingly never-ending debt?

Many factors go into deciding whether bankruptcy or the consumer proposal is the best option, but luckily you won’t have to make that decision alone. Our team of trained professionals is here to help you get back on your feet and come out stronger.

Get in touch with us to learn more about our consumer proposal services in Ottawa and book your consultation today.