These days, millions of hard-working Canadians are struggling simply to make the minimum payments on their credit cards, medical bills, personal lines of credit and other unsecured credit facilities. From British Columbia to Nova Scotia, a perennially weak economy, high retail interest rates and tight lending standards have conspired to darken the financial horizon and imbue the country’s economic future with an unwelcome measure of uncertainty.
If your finances have worsened substantially in recent years, you’re not alone. In fact, you’re in the majority. Despite a nascent economic recovery, most Canadians say that they’re less well off today than they were five years ago. Much of this pessimism can be attributed to a collective crisis of personal debt that threatens the very fabric of Canadian society.
With some financial sleight of hand, you may be able to hide the size and scale of your debt problem from your loved ones. You may even be able to convince yourself that you shouldn’t worry about your mounting obligations.
Of course, it’s only a matter of time before the charade falls apart. When it does, you’ll need to devise a plan to bring your debts under control and regain your financial footing.
Before you consider filing for bankruptcy, you may want to consider some less-drastic measures of credit relief. Once you file for bankruptcy, you’ll receive an R9 credit rating and may find yourself unable to use traditional sources of credit without paying exorbitant rates of interest. Your financial reputation will be crippled for years, impacting your ability to secure a new loan, get a credit card, or even find a decent-paying job.
In Canada, consumer proposals offer many of bankruptcy’s benefits with few of its unpleasant side effects. Like bankruptcy proceedings, consumer proposals are initiated and executed by licensed trustees in bankruptcy. In fact, Canadian law permits no one but these highly-trained professionals to handle the often-tricky consumer proposal process. If you elect to try this alternative to bankruptcy, your finances will be in good hands.
Consumer proposals offer several distinct advantages. One is peace of mind: Once you initiate the process, your creditors may no longer attempt to collect on your debts. Likewise, any in-process wage garnishments related to credit card, medical or business-loan debt will cease.
This is just the beginning. The consumer proposal process immediately stops your debts from accumulating any further interest and specifically shields your home, car and other valuable assets from seizure. Once the settlement that your trustee negotiates with your creditors has been finalized, you’ll work out a repayment plan that is capped by law at five years. In other words, your consumer proposal is likely to free you from most of your unsecured debts in five years or less.
You’ll need to meet certain standards to qualify for a consumer proposal in Canada. First, your total unsecured debt load must be between $5,000 and $250,000. You must pass a means test, determined by your monthly income, to ensure that you can make the monthly payments set forth in your repayment plan. You must also demonstrate that you are technically insolvent and unable to repay your outstanding debts.
Assuming that you meet the process’s eligibility criteria, your consumer proposal will require a great deal of back-and-forth negotiation between your trustee and your creditors. Once these negotiations have wrapped up, your trustee will present a contract, or “consumer proposal,” to your creditors and ask them to vote on its merits.
This voting process can be confusing and even intimidating. For one, each dollar of debt that you owe is technically entitled to cast its own “vote.” In practice, this means that a theoretical creditor to whom you owe $5,000 may cast 5,000 votes for or against your consumer proposal. In addition, a rejected consumer proposal may send your trustee back to the drawing board and leave you in financial limbo. Fortunately, creditors overwhelmingly accept consumer proposals in Canada in the first round of voting.
One reason for this high rate of acceptance is the simple fact that creditors abhor personal bankruptcy filings. If you don’t have many tangible assets, a robust income stream, or a large reserve of cash on hand when you file for bankruptcy, your unsecured creditors may walk away from the process with nothing to show for it. On the other hand, the consumer proposal process virtually guarantees that they’ll recoup part of their investment.
Unfortunately, your consumer proposal may not discharge certain types of debts. Recent student loans, alimony payments, and outstanding child support obligations generally remain in force after your proposal is finalized. Like other methods of debt relief, including bankruptcy, consumer proposals also can’t discharge secured debts like car loans or mortgages.
If you’re looking for a quick, low-cost alternative to a consumer proposal, consider trying debt settlement. Like the trustees in bankruptcy who negotiate consumer proposals, debt settlement professionals take pride in negotiating significant debt reductions for their clients. Although every debt settlement case is different, past customers have seen their outstanding balances slashed by 40 to 60 percent. In addition, debt settlement often requires less time than other methods of debt relief. Some workouts may take as little as 12 months.
If you need fast, affordable debt relief, debt settlement may be your best option. Contact Maple Leaf Debt Helpers toll-free or fill out the free online form to learn more about debt settlement today.
