Consumer proposal frequently asked questions
July 25, 2018 (Investorideas.com Newswire) Here in Canada, consumer proposals are currently one of the most popular ways to get individuals out of debt and they are certainly on the rise. But as with all debt solutions, many of us have questions that need to be asked and answered. Thankfully we have selected some of the most common ones here for your perusal. So, if you are currently interested in talking to a financial advisor or a licensed insolvency trustee (LIT) about consumer proposals, please read this short article first for some insight.
What is the difference between bankruptcy and a consumer proposal?
This is a commonly asked question and there are a couple of very important differences:
- When you decide on a consumer proposal you will have a fixed amount to pay back to your LIT every month and this will remain the same amount. Bankruptcy repayment can vary and is typically based in what is deemed to be your surplus income.
- Bankruptcy can be declared no matter how large your debt is, with consumer proposal, your maximum debt is $250,000.
- Bankruptcy usually means that your assets need to be sold off to help repay the debtors, consumer proposal does not have this requirement.
Will I lose everything I own?
Don’t worry, the mazda3 that you drive to work in will not be possessed if you choose to opt for consumer proposal. All of your assets will be protected and your unsecured creditors will not be able to take any of your assets. The debts on your home and car will not be included in the consumer proposal so you will need to continue making these payments as before.
What types of debts are included in my consumer proposal?
Typically, any type of unsecured load can be part of your consumer proposal and these include the following:
- Personal loans
- Credit cards
- Income tax
- Payday loans
- Other lines of credit
Will my car loan or mortgage be affected?
If you recently agreed a loan for that sweet , Chevrolet Camaro it will not be included in the consumer proposal. The same goes for your mortgage because these are not unsecured loans. You will need to keep paying these regardless of the terms of your consumer proposal. The fact that your consumer proposal should decrease your outgoings as far as your unsecured loans are concerned means that it should be easier to make those secured loan payments. Your LIT will be able to help you to make these as affordable as possible so do not worry too much as they are trying their best to help you out of your current financial quandary.
How long will it last?
Normally, your consumer proposal will last a maximum of 5 years and the exact length will be determined by your personal circumstances. You will need to discuss the best solution with your LIT and they will work with you to ensure the most manageable repayment plan.
We hope this article helped to answer some of your questions about consumer proposals, please make an appointment to speak to a LIT for more specific information.
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