Knowing When To File A Consumer Proposal Or Opt For A Debt Management Plan

2012-03-28   minute read

Watch the video or continue reading below. As Canadians, we have a number of choices available to us in determining the best solution for managing our debts. Obviously, everyone’s circumstances will be a bit different, but the following questions may help you determine the best direction for you: How much do I owe and what kinds of creditors do I have?How far behind are my payments and have they already been assigned to collection?Are 100% of my creditors willing to negotiate or have legal proceedings already begun?Do I have the ability to make regular payments after paying my household bills? When to Consider a Debt Repayment Plan If you are able to afford it and qualify, a debt consolidation loan will be the best alternative for preserving your credit rating and managing your debt into one repayment plan. If all of your creditors agree, you can approach a debt consultant to help you negotiate a repayment plan to certain unsecured creditors over time. They will generally charge you a fee up front and an ongoing cost as you make payments and there is no legal guarantee that your creditors won’t change their minds regarding the arrangement at a later date. If your debts are already placed in collection or legal action has started, you generally need more assistance than these arrangements can provide.When to Consider a Consumer Proposal If your credit history, the status of your debts or your personal circumstances make the prior options unworkable, a Consumer Proposal allows you the opportunity to legally stop your creditors and repay only a portion of the debt you owe – in manageable payments up to 5 years with no interest. The effect on your credit rating is less severe than a bankruptcy or if your debt is with a collection agency. Also, 100% of your unsecured creditors don’t have to agree to your Consumer Proposal as they would a debt management plan – if the majority approve of it, all must accept it. Your first decision is to take action to address your debt. For a free consultation on the options available to you, pleasecontact me directly or consult ourDebt Help FAQ.

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