DEBT RELIEF OPTIONS IN BARRIE, ONTARIO
Consumer Proposal
A consumer proposal is one of the most efficient solutions to mounting debt problems. If you don’t qualify for a debt consolidation loan, can’t repay all of your original debt, or your debt outvalues your assets, it might be the right solution, whether you are struggling with credit card debt, tax debt or personal loans.
A consumer proposal is a legally binding contract between you and your creditors that allows you to consolidate and settle your debt for up to 80% less than you owe. The process of a consumer process is relatively straightforward. At first, our Licensed Insolvency Trustees (LIT) will thoroughly review your financial situation to determine which debt relief option is the right solution for you. If a consumer proposal is the best option, they will assess a realistic monthly payment amount you can afford and prepare the proposal, outlining how much of your debt you will be able to pay your creditors and your LIT will submit the proposal to your creditors for approval. Once they approve your proposal, the agreement becomes binding, and you will make the agreed monthly payments to your LIT, who will distribute the funds according to the proposal. Once all conditions of the consumer proposal are fulfilled, the remaining debt is discharged.
The most significant benefits of a consumer proposal are:
- Discharge up to 80% of your debt
- Stop all legal action, such as wage garnishments or frozen bank accounts
- Stop all collection calls
- Keep all assets, including tax refunds
- No additional interest on any debt included in the proposal
Please note that only Licensed Insolvency Trustees (LIT) like Chande Debt Solutions are allowed to file consumer proposals.
Debt Consolidation vs. Consumer Proposal
Reviewing all debt relief solutions and their benefits and drawbacks is critical before deciding on an option to ensure you are making an informed decision. Many Canadians want to explore debt consolidation instead of a consumer proposal because one of the most significant advantages of a debt consolidation loan is that it has no negative impact on your credit score as long as you continue to make your monthly payments on time. You also only have to deal with your financial institution and no third party.
However, debt consolidation has some significant drawbacks that you must consider before deciding. The first hurdle is the eligibility. Like a home equity or personal loan, you might not qualify for a consolidation loan if your credit score is already impacted. The interest rate on the consolidation loan may also be considerably higher, depending on your credit standing. While some consider the fact that you can keep all of your credit cards and other sources with high interest rates an advantage, it can be a significant drawback because unless you adjust your spending habits, you cannot fix the underlying issues of some of your debt and may end up in the same situation as before.
On the other hand, a consumer proposal will affect your credit score. You can only cover unsecured debts (i.e. credit card debt, personal loans, tax debt or, depending on their age, student loans), but it comes with significant benefits, such as discharge of up to 80% of your debt owed. Another advantage to consider is that all legal action and collection calls will immediately stop once your proposal is filed so that all wage garnishments will be removed, and frozen bank accounts will be unfrozen. Any debt included in the proposal also will no longer accrue any additional debt.
Personal Bankruptcy
Generally, personal bankruptcy is the radical last resort when all other options are exhausted. Unfortunately, in some circumstances, you don’t have many choices. While it is a quick and cheap solution to your debt problems, it also severely impacts your credit score, and you will lose any non-exempt assets.
