A call regarding collections, the garnishment of your wages or legal lawsuits is what forces people to contact us here at GTA Credit Solutions for our services. The pathway you will require as a debt relief option will depend heavily on the financial aspects and which creditor protection you require.
A Look At Debt Management Planning For Smaller Debts
Based upon the income you are receiving, your options for relieving debt will range. In majority of the people, they will seek something that looks like a consolidation with a single payment every month that also fits their budget. For this the consumer has two options which are a debt management plan or they go the other route of a consumer proposal – both of which will allow them to work towards more financial freedom.
Now if your debt is not a big amount a debt management plan may be the best option. These plans are voluntary which means that the creditors will make the decision whether they want to engage in such a plan. How this debt management plan would work is it would combine all your existing debts with minimum or no interest. Most of the time this plan spreads over four years with your debt being paid over a span of 48 months. In this plan no extra fees or expense costs are added for the service the monthly debt management plan.
If you can afford payments to repay your existing debt but the interest is what’s giving you problems when it comes to affordability, then a debt management plan is an excellent way to overcome this obstacle. This is usually chosen if you are in position to pay your debts which usually range from $5,000 – $10,000 and is composed of two to three credit cards, which will then allow you to make an agreement with the creditors you are having issues paying. In return the creditors can voluntarily refrain from any steps they are taking like sending your account to a collections agency where they repeatedly call your or making an attempt to garnish your wages you are currently earning.
Consumer Proposal Deal To Work Out The Debt
A key point to learn here is that the above stated in this blog regarding debt management plans is that they are not legally enforced contracts between the two parties. This is all voluntary and is up to the creditor whether they are willing to agree. Now if the creditor refuses to agree with this and you are in need of creditor protection then the option of a consumer proposal may be a better option at the end of the day. Also if you’re debt is in a surplus of $10,000 and the monthly payment is extremely high under your debt management plan then a consumer proposal is a more convenient option.
A consumer proposal must be filed through a Licensed Insolvency Trustee because of legality of the process in the Bankruptcy & Insolvency Act. Through this you will be protected from wage garnishments, collections calls and any other type of legal actions.
Consumer proposals are meant to act as a debt settlement solution in the case where your debt can’t be repaid in full form. Rather, you repay a portion of the debt usually over a maximum of five years. This option also allows you to increase your payments and perhaps pay off the debt even faster. One key point to keep in mind is that you are not allowed to extend payments past the agreed date that is set in your proposal before hand.
The consumer proposal is an offer in which the creditor will choose to accept, modify, or not approve the proposal. Creditors will have 45 days to make a decision on the offer you have provided them with and if that gets accepted (will require half of all votes of the creditors) then it becomes a legal agreement between both parties meaning you and the creditors you are dealing with.
A Quick Recap Of The Differences Between Debt Management Plans & Consumer Proposals
Debt management plans are voluntary whereas consumer proposals are legal agreements between you and your creditor. Secondly, wage garnishments, collection calls, and other actions made by the creditors can be prevented in a consumer proposal however not the same is possible in debt management plans. Thirdly, consumer proposal will lessen the closing debt you have to repay whereas in a debt management plan you will be required to repay the full amount. Fourth, consumer proposals usually have a much less of a monthly amount that needs to be paid in comparison to debt management plan.