How Long Does A Consumer Proposal Last?

2015-09-14

Now that you’ve made the decision to start working towards a fresh financial start, it’s important to have all the information you need to move forward. After all the time you’ve spent struggling with unmanageable debt, the last thing you need is another confusing situation related to your financial distress.

A consumer proposal can be a great debt solution that allows you to pay off your debt – while getting creditors off of your heels and putting an end to the day-to-day stress of harassing phone calls. But how exactly does a consumer proposal work? We’re glad you asked!

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The basic rule is that a consumer proposal can be structured from a minimum of sixty days to a maximum of five years. Consideration then needs to be on how your payments will be structured depending on your income.

A consumer proposal can be structured in a number of ways: monthly instalments over time, a lump sum (one time) payment or even a combination of those options. Each consumer proposal is different and tailored to fit the budget and circumstances of each person. Examples may include:

1. One person may want to set up monthly payments or other instalments over a period of time, not to exceed five years. This person would complete two financial counselling sessions and would continue to make the payments monthly until the final payment was made.

2. Another person may have a family member who is willing to fund a onetime payment to creditors. If that proposal were accepted, a debtor would be required to complete the financial counselling sessions within the first few months of filing and would then be finished with his or her consumer proposal.

The advantages of filing a consumer proposal over other options are numerous. Advantages can include:

1. Should you have any type of windfall such as a bonus at work, a tax refund or an unexpected inheritance, you have the ability to pay off your proposal early and start rebuilding your credit earlier.

2. Should your financial income increase, such as overtime or a change in job, you can increase your payments and complete your proposal early.

3. There is no penalty for paying off a proposal faster or earlier.

4. You can have the convenience of a fixed payment which allows you to better manage your budget.

It’s important to consider timing when reviewing your options for dealing with your debt. The sooner a process ends, the sooner you can start rebuilding your credit.

Just remember, you’re not on your own in making these decisions. A licensed MNP Trustee will help you structure a consumer proposal that best works for you and your unique situation.

MNP offers a free initial consultation where we will be able to draft a financial appraisal for you, discuss all available options and help you determine the best option customized for your specific needs.