John, a 35-year-old Canadian, has found himself under a considerable pile of debt.
He owes $20,000 in on his credit cards and has personal loans amounting to $25,000. Unable to manage his monthly payments, he’s now dealing with persistent collection calls and legal threats from his creditors.
He decides to speak to a licensed insolvency trustee about a Consumer Proposals. Together, they develop a proposal for the trustee to present to his creditors, which includes:
- five-year payment plan
- manageable monthly payment of $216/month.
- interest, penalties & additional charges are stopped
Once this proposal is negotiated and agreed upon, it becomes a legally binding agreement. John is now committed to making the agreed payments, while his creditors are barred from taking any further legal action against him.
In John’s case, his total debt was $45,000. Filing a consumer proposal reduced his debt to $13,000 and saved him $32,000. The $13,000 is payable over 5 years at about $216/month. With the Consumer Proposal, he reduced his overall debt by a whopping 70%.
Keep in mind that this is merely an illustrative example. The specifics of a Consumer Proposal can vary based on an individual’s circumstances and the agreement reached with their creditors.