Payment Plans

When dealing with financial debt you only have a limited number of options:

• consolidate the loans
• consumer proposals
• bankruptcy

Although consolidating loans maybe an option, it still leaves you with a huge debt to pay.  Once you consolidate you may only have one loan to pay but the payment and terms may still be overwhelming and difficult to pay.

A consumer proposal is similar to payment plan in a consolidation loan, except the debt is reduced up to seventy (70) percent, and unlike a consolidation loan, all interest payments are stopped.

Bankruptcy can be an option for those whose debts and income do not allow for a consolidation or proposal and will give you a fresh start on your finances.

Many people find that a consumer proposal has the benefits of a consolidation loan without the consequences of filing for bankruptcy.

In a proposal the administrator (the insolvency trustee) meets with your unsecured creditors (the people you owe money to).

The creditors are given an option to accept a payment plan to receive some payment on the debt, where you will pay them a reduced monthly amount.

The amount of the payment will be decided by you and the administrator working together to make a budget that you can affordably pay.  The goal is to pay off the debt as quickly as possible while allowing you to manage your finances.

Your monthly payment plan to the creditors are paid over a maximum of five (5) years.  The amount would be divided by sixty (60) months giving a monthly payment, for example;

• debt amount = $10,000
• divided by 60 months = $10,000 / 60 months
• equals $166.66 per month

The monthly amount maybe be increased over the 60 months to pay off the debt sooner, but not decreased.

In a back ended payment plan the payment start small and increase over time. For example,

• year one –   150 dollars per month
• year two –   200 dollars per month
• year three -275 dollars per month
• year four –  300 dollars per month
• year five –   350 dollars per month

On a payment plan in a back ended payment your payments allow you to get on your feet during the first part and then to gradually increase the payments over time, and as your financial situation improves.

This type of proposal is best suited for people who expect their job situation to improve and other secured debt e.g. your mortgage to decrease over time.

In a front ended payment plan the debtor may have some funds available to make a down-payment on the debt.

When we review your financial situation we may find for example that you can get rid of a car, or sell something that you don’t need to put money on your debts.

Some people know that they will be facing a retirement or reduced income in the future so the debt repayments may start off higher but be reduced over time.

For Example,

• 250 per month for the first and second year
• 175 per month in the third year
• 100 per month for the forth and fifth years

The goal with any payment plan is for you to make monthly payments that are affordable allowing you to pay off the debt.