DEBT RELIEF OPTIONS IN LONDON, ONTARIO
What is a Consumer Proposal?
A consumer proposal is an effective debt solution in London that provides immediate financial relief and sets you on the path to a more stable economic future. If you are struggling with credit card debt, personal loans, or tax debt and do not qualify for a debt consolidation loan, a consumer proposal might be the right solution for you.
A consumer proposal is a legally binding contract between you and your creditors that consolidates your debt and settles it for less than you owe. Our Licensed Insolvency Trustees (LIT) will review your financial situation to determine if a consumer proposal is the best option. If so, we will calculate a realistic monthly repayment amount you can afford and submit the proposal to your creditors for approval. The proposal becomes legally binding when they accept it, and you will start making monthly payments. Once all proposal conditions are fulfilled, the remaining debt is discharged. While the maximum repayment period is five years, you can pay it off before.
The most significant benefits of a consumer proposal include:
- Discharging up to 75% of your debt
- Stopping all legal actions, such as wage garnishments or frozen bank accounts
- Halting all collection calls
- Keeping all assets, including tax refunds
- No additional interest on any debt included in the proposal
Only Licensed Insolvency Trustees, such as those at Chande Debt Solutions, are authorized to file consumer proposals.
What Debts are covered in a Consumer Proposal?
A consumer proposal in London includes most unsecured debts, meaning any debt not secured by an asset, such as a mortgage or car loan, cannot be included. Typically, the following can be included in a consumer proposal:
- Credit card debt
- Personal loans, including lines of credit, consolidation, or renovation loans, provided no assets secure the debt.
- Payday loans
- Student loans, if you ceased to be a student at least seven years agIncome tax debt, including amounts owed for personal income tax (including penalties and interest), GST debts, Canada Child Benefits overpayments, CPP, and OAS overpayments
Alternatives to Consumer Proposal
When considering debt relief options, evaluating all possible solutions thoroughly is crucial. Your Licensed Insolvency Trustee (LIT) can help determine the best course of action for your situation.
Bankruptcy
Bankruptcy, also managed by a Licensed Insolvency Trustee, involves the trustee overseeing your case, managing your assets (with certain exceptions), and supervising your financial affairs. This includes mandatory credit counselling sessions and monthly income and expense reporting. If all these duties are fulfilled, you can achieve a debt discharge after either 9 or 21 months.
Debt Management Plan (DMP)
In a Debt Management Plan, a credit counsellor assesses your debts and puts together a multi-year repayment plan spanning three to five years. This plan is submitted to your creditors for approval. If accepted, you make a monthly payment to the credit counselling agency. The credit counsellor may negotiate reduced interest rates on your debt, redirecting the savings toward debt repayment. Participation in a DMP is voluntary for your creditors, so not all creditors may agree to the plan, and they can withdraw from the agreement at any time.
A DMP does not involve debt reduction or cancellation; you must still repay the entire debt amount. This is a fundamental distinction from a consumer proposal.
Consolidation Loan
With a debt consolidation loan, you can pay off multiple smaller loans or debts or consolidate higher-interest debts into one payment with a lower interest rate over an extended period. However, this approach does not eliminate your debt but makes it more manageable. Eligibility for a consolidation loan requires an application and qualification process.
