You know one thing for sure: you’re in debt. But what you’re not as sure of is the best way to get control of your debt and ultimately get out of it. Is bankruptcy the right option for you? Credit counselling? Consolidating your debt? A consumer proposal? Depending on many factors, any of these (and other) debt solutions could be right for you.

Today’s post will tell you more about one option in particular: consumer proposals. Not only will we explain what this solution means, but we will also cover some of the potential advantages and disadvantages of taking this route. Let’s begin.

What is a Consumer Proposal?

So, what exactly is a consumer proposal?

Consumer Proposal is a debt solution people often turn to if they can’t handle their debt or if they owe less than $250,000. With this option, your counsellor drafts a proposal and sends it to your debt collectors for review. Submitting the proposal to your creditors prevents them from calling you and garnishing your wages. Then, debt collectors have 45 days to accept or reject your proposal.

At some point during the review period, creditors may request a meeting with you and your credit counsellor to discuss your proposal.

debt solutions
best debt solution for you

Pros and Cons of a Consumer Proposal

Now that you have a better idea of what it means to file a consumer proposal, let’s explore the pros and cons of this solution.

Potential Advantages

There are many advantages to this debt solution that makes it an attractive option to Canadians in debt.

They include:

  • This debt solution means there is no bankruptcy on your file. 
  • Asset protection: It means you can hold on to your assets and investments. 
  • Consumer proposals can help you reduce your monthly payments for your debts because you can negotiate how much you owe. 
  • Harassing phone calls from creditors will stop.
  • Wage garnishment stops. (Are you currently facing wage garnishment in Alberta? Click here to learn about your rights)
  • You will be responsible for your monthly payments, but you won’t have other costs or fees.

Potential Disadvantages

Like any debt solution, there are also potential disadvantages worth noting before you move forward.

In this case, they include:

  • If you default on payments, your secured creditors may be able to seize your assets
  • You may continue to accrue interest throughout the repayment process on some of your secured debts. 
  • You will need to rebuild your credit score after filing a consumer proposal because it impacts your credit rating (Do you want to learn more about credit scores? Visit this post next)
  • A consumer proposal is, in fact, a proposal. That means your creditors could potentially refuse or deny it. 

(Do you want to learn even more about consumer proposals, including what they can and can’t include and how the process works? Visit this FAQ next)

Is a Consumer Proposal Right for You?

Debt is stressful, and when you aren’t sure of the best way to get out of it, this only compounds your stress. But the experienced and compassionate team at Fox-Miles is here to help. 

Calling us is the first step towards finding a solution to your current debt stress, whether it’s a consumer proposal or another option. So, if you are looking to restart your financial future, contact Fox-Miles & Associates today.

We can explore your options during a free consultation with us and determine if a consumer proposal is the best solution for you. Click here to book.