Stressed out by how much debt you’re carrying? If you’ve been looking for a way out of debt, you may have heard about consumer proposals. What is a consumer proposal? It’s an alternative to bankruptcy that will settle your unsecured debts without losing any assets. A consumer proposal takes up to five years to complete, during which time you pay your unsecured creditors a fixed monthly amount. A consumer proposal involves having your creditors agree to a fixed amount they will receive over that time.
Bankruptcy trustees, now known as Licensed Insolvency Trustees, are the only professionals who can help you file for a consumer proposal and distribute your payments. Book an appointment with a bankruptcy trustee for a consultation if any of these circumstances apply to you.
1. Your Credit Cards Are Maxed Out
If you’ve hit the limit on multiple credit cards, it’s a sign that you may be living beyond your means and paying it back will prove to be difficult. Supplementing your budget with a credit card can only last so long before you have to pay it back, and you already don’t have room in your budget.
2. You Struggle to Make Minimum Payments
In order to pay back your debt quickly and with as little interest as possible, you need to make payments much bigger than minimum. Once you’re struggling to make even the minimum payments, it’s a sign that you could be insolvent and eligible for a consumer proposal.
3. You’re Trapped in the Payday Loan Cycle
Payday loans have some of the highest interest rates you can legally be charged. The payday loan cycle is one that can leave you short every paycheque. High interest rates mean once you pay back your first one, you need to take out another just to make rent or the bills. Payday loans can seem quick and convenient when emergency expenses like car repairs come up, but you can wind up paying a lot for them.
4. You Have Assets You Want to Protect
Owning assets such as property or investments is another reason to consider a consumer proposal as opposed to bankruptcy. A consumer proposal protects your assets. Instead, you pay your creditors cash in fixed monthly payments.
5. You’re Getting Collection Calls and other Legal Actions
Collection calls can disrupt your home and work life and leave you feeling anxious, while legal actions such as a garnish on your wages can disrupt your ability to keep up with other payments, such as rent or your mortgage. A consumer proposal puts a stay on legal actions to collect from all creditors.
If you’re wondering if a consumer proposal is right for you, talk to a bankruptcy trustee about your options. Everyone’s financial circumstances are different, but these are 5 signs that a consumer proposal could be your best way out of debt. Talking to a bankruptcy trustee will clear up your questions so you know what you’re getting into. Bankruptcy trustees like David Sklar & Associates in Toronto offer free first-time consultations. Once you decide to go ahead with a consumer proposal, they assist you every step of the way. Get out of debt today with a consumer proposal.