Is Consumer Proposal the Silver Lining for You?

Don’t we all end up spending a little too much money on things we hardly need? However, if this problem gets out of hand, you may end up with a huge amount of debt. In that case, you have two options. You can either declare bankruptcy or you can file for a consumer proposal. If you are one of those individuals who do not want to mess up their past legal records with the addition of a bankruptcy to it, then a consumer proposal is the silver lining available to you.


By opting for a consumer proposal, you can negotiate with your creditor and settle the debt amount; whereas bankruptcy doesn’t provide you with this option. In bankruptcy, you don’t get a choice and you have to settle for what is offered. However, a consumer proposal is a legally binding debt settlement agreement in which the person in debt has to payback a certain percentage of their total debt. These payments take place on a monthly basis, and are set at an affordable range. The payments can take place till the span of 5 years, and after that, they are relieved.

Additionally, the interest with the payment remains frozen at the time of filing, which saves you from paying additional interest money on it. Another extra bonus for selecting a consumer proposal is that it offers immediate debt relief, unlike debt consolidation, where payment of debt with the interest takes place.

Covered Debts

The debts that are covered in consumer proposal are unsecured debts which include:

  1. Bank Loans
  2. Finance Company Loans
  3. Credit Cards
  4. Income Taxes
  5. Payday Loans
  6. Canada Revenue Agency Debts
  7. Student Loan (more than seven years)

Your secured debts are not discharged and should be paid by you timely. These are:

  1. Car Loan
  2. House Mortgage

Reasons to Choose Consumer Proposal

  1. Many people choose consumer proposal to evade bankruptcy because of greater debt.
  2. If in future, you are settling for a profession which will cause trouble for you with the history of bankruptcy on it, then a consumer proposal is the best option.
  3. The process of consumer proposal is easier as it requires meeting with the administrator and formation of a plan. After the plan is approved, you can start the monthly payment without any documentation proof of income.
  4. Consumer proposal will save your assets, and the payment of your mortgage or car loan is continued without any obstacle. Whereas, a bankruptcy trustee will sell your assets.
  5. The set monthly income is decided beforehand and you don’t have to fuss over how much money you make.
  6. In bankruptcy, the higher your income, the greater you have to pay. However, in consumer proposal, a small amount is set which you pay for the period of 5 years.
  7. If you believe that you will need credit in the future because of which you want your credit rating good enough to be considered, then consumer proposal is the correct alternative.

Before coming to a decision, assess the situation and keep all your options open. You can also consult a nearby counselor who can facilitate you in reaching a conclusion, by considering all the related legal issues.

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