Advantages & Disadvantages of Consumer Proposals

Understanding the Advantages and Disadvantages of Consumer Proposal in Canada

Consumer Proposals have emerged as a leading alternative to bankruptcy in Canada. Their rise in popularity is largely due to their significant advantages and being the exclusive government-approved debt settlement program in the country.

• Protection of Assets: A standout advantage of a Consumer Proposal is the ability to retain your assets, encompassing tax refunds, investments, and home equity.

• Reduced Monthly Payments: Based on the terms negotiated with your Trustee, you’ll often repay just a fraction of your total debt. In many cases, debts are reduced by as much as 70%.

• Stable Payment Structure: Unlike bankruptcy, which can vary based on income, the Consumer Proposal offers fixed monthly payments.

• Creditor Safeguards: Once approved, a Consumer Proposal provides protection from creditors, halting collection calls and wage garnishments.

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• Extended Duration: Though beneficial for many, Consumer Proposals can take longer to complete than bankruptcy. However, early settlement is an option if finances improve.

• Credit Score Impact: Consumer Proposals do impact your credit rating. An R7 rating will be attached, remaining for 3 years after completion.

• Mandatory Compliance: It’s essential to consistently meet payments and adhere to the proposal’s terms, or risk termination of the agreement.

• Not Suitable for All: For those with limited income and no significant assets, personal bankruptcy might be more appropriate than a Consumer Proposal.

When you’re thinking about the advantages and disadvantages of Consumer Proposal, it becomes clear that while a proposal offers benefits, it’s not a one-size-fits-all solution.

To ensure you’re making the right decision, it’s crucial to consult with our Licensed Insolvency Trustees (LIT). If the “Advantages and Disadvantages of Consumer Proposal” are on your research list, we’re here to guide you.

Contact us today, and let’s find the best financial solution for your unique circumstances.