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In Canada, people have the choice to declare a consumer proposal as an alternative to bankruptcy. It is a legally-binding deal between a creditor and a debtor where they will agree on a set amount to be paid by the debtor for a specified duration. The consumer proposal which Ontario financial professionals encourage is a pragmatic remedy to financial obligation issues. How Does a Consumer Proposal Work? After you have declared your consumer proposal, your financial institution will be given 45 days to make a decision if it will approve the proposal. If the creditor concedes to it, you must start monthly settlements for a fixed period, commonly five years or depending on the arrangement. For example, you owe $100,000. With the proposal, you only need to pay $47,000; split this amount by five years, and you'll essentially be paying about $783 per month. Bear in mind that a consumer proposal is simply plausible if your financial obligation is not above $250,000. Otherwise, you must file bankruptcy. Since this is a legitimate agreement, the presence of a Proposal Administrator is needed. He will take the fees from you and allocate this to your creditors. If you are truly considering a consumer proposal, it's better to undergo expert credit counseling so you understand more effectively your situation and are urged of your options. Why is Consumer Proposal Better than Bankruptcy? If you still have to pay your lenders, wouldn't it be better to just file bankruptcy? Not essentially. A consumer proposal enables you to secure your assets in contrast to when you declare bankruptcy. You also get to retain your tax refund and the equity of your home. When you file bankruptcy, you must submit a proof of income and a monthly budget. This suggests that the more you earn, the more you must pay. Even bonuses, salary increases and overtime wages should all be presented. When you have a consumer proposal, you already have an idea of the precise amount you ought to give every month. Why is a Consumer Proposal a Win-Win Situation? Both the creditor and debtor benefit from a consumer proposal. The lender is able to get at least part of his money; and you can repay all your financial obligations. If you declare bankruptcy, there's a greater possibility your lenders will get much less than what you offered in the proposal, or more serious, will not be paid off at all. To find out more, see ic. gc. ca/eic/site / bsf-osb. nsf/eng/br01976. Html.
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