DEBT RELIEF OPTIONS IN BRAMPTON, ONTARIO
What is a Consumer Proposal?
A Consumer Proposal is a federally regulated, legally binding process administered by the Office of the Superintendent of Bankruptcy, offering a viable alternative to personal bankruptcy. This process is exclusively managed by a Licensed Insolvency Trustee, a qualified professional who assists individuals in navigating the complexities of debt resolution.
At the core of a Consumer Proposal lies the assessment of your income and assets to determine a repayment amount you can realistically afford. One of the most compelling advantages of a Consumer Proposal is that you can reduce your unsecured debt included in the proposal by up to 80%. This substantial reduction brings immediate financial relief and can get you on the path to a more stable financial future.
The process begins with a Licensed Insolvency Trustee conducting a thorough evaluation of your financial situation and setting up a customized repayment plan that aligns with your financial capacity. This proposal is then presented to your unsecured creditors for approval and once they accept, it becomes legally binding. While the maximum repayment period is five years, you have the option to settle the proposal earlier if your financial situation improves.
What Debts are Included in a Consumer Proposal?
You can include most unsecured debts in a Consumer Proposal, including most types not secured by assets such as a house or car. Generally, the following types of debt can be included in a Consumer Proposal:
- Credit card debt
- Personal loans include lines of credit, consolidation loans or renovation loans, as long as no assets have been used to secure the debt.
- Payday loans
- Student loans – if you have ceased to be a student at least seven years ago
- Income tax debt – this includes amounts owing for personal income tax (including penalties and interest), GST debts, Canada Child Benefits overpayments, CPP and OAS overpayments.
Is a Consumer Proposal the Right Option for Me?
A consumer proposal may be suitable for you if:
- You have debt less than $250,000, excluding the mortgage on your principal residence
- You are insolvent, meaning you are unable to pay your monthly obligation
- You want relief from wage garnishments, collection calls and accumulating interest
- You want to keep assets that may not be protected in a bankruptcy
Exploring Alternative Debt Relief Options
When exploring debt relief options, it is crucial to evaluate all alternatives to identify the solution that best suits your financial situation.
Bankruptcy
Bankruptcy, also managed by a Licensed Insolvency Trustee, involves appointing a trustee to oversee your bankruptcy proceedings. With certain exemptions, this trustee assumes control of your assets and manages your financial affairs, including mandatory credit counselling sessions and regular income and expense reporting. You can achieve debt discharge after 9 or 21 months upon fulfilling these obligations.
Debt Management Plan (DMP)
A Debt Management Plan involves a comprehensive evaluation of your debts by a non-profit credit counsellor, followed by developing a structured repayment plan spanning three to five years. This plan is then presented to your creditors, and once they accept, you make a single monthly payment to the credit counselling agency. While a DMP may include negotiations for reduced interest rates, it is essential to note that it does not involve debt reduction or cancellation; you are required to repay the entire debt amount. Creditors can also withdraw from the plan at any time.
Consolidation Loan
A consolidation loan allows you to combine multiple smaller loans or debts into a single new loan arrangement. This approach aims to streamline payments by consolidating higher-interest debts into one payment with a lower interest rate over an extended repayment period. However, it is essential to understand that this strategy does not eliminate debt but rather makes it more manageable. Additionally, obtaining a consolidation loan requires an application and qualification process.
