DEBT RELIEF OPTIONS IN ETOBICOKE, ONTARIO
If you’re looking for an efficient solution to mounting debts, a consumer proposal can help you battle credit card debt, tax debt or personal loans. If you don’t qualify for a debt consolidation loan, your debt outvalues your assets, or you can’t repay all of your original debt, it might be the right solution for you.
A consumer proposal is a legally binding contract between you and your creditors that allows you to consolidate your debt and settle it for up to 80% less than you owe. The process begins with one of our Licensed Insolvency Trustees (LIT) reviewing your financial situation to determine the right solution for you. If they conclude that a consumer proposal is the best option, they will calculate a realistic monthly payment amount you can afford and submit the proposal to your creditors for approval.
Once we receive the approval, the agreement becomes legally binding, and you will make the monthly payments. Once all conditions of the consumer proposal are fulfilled, the remaining debt is discharged (written off).
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
One of the most common questions we get is about the difference between debt consolidation and consumer proposals. One of the most significant advantages of debt consolidation is that it has no negative impact on your credit score (as long as you continue to make payments on time) and that you do not need to deal with anybody but your own financial institution. However, a debt consolidation loan comes with some significant drawbacks.
Depending on your payment and credit history, you may not qualify for a consolidation loan. If you do, the interest rates could be very high due to missed payments in the past, which may mark you as a credit risk. Another drawback is that you can keep all credit cards and other sources with high interest rates. So, a debt consolidation loan will not fix the underlying issues unless you adjust your spending habits.
On the other hand, while a consumer proposal will affect your credit score and you can only cover unsecured debts (i.e. credit card debt, personal loans, tax debt or, depending on their age, student loans), its benefits are significant. You can discharge up to 80% of your debt owed. Once the proposal is filed, all legal action and collection calls and any additional interest on the debt included in the proposal will be immediately stopped.
Personal Bankruptcy
In most cases, personal bankruptcy is considered the radical last resort when all other options are exhausted. Unfortunately, sometimes there is no other alternative available. 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.
