You could suffer a significant reduction in your income through injury or illness, or suffer job loss and / or marital separation. Many still have income, but not the ability to repay the debts they originally incurred.
A consumer proposal is a great option, says Nathan Sugeng, Licensed Insolvency Trustee (LIT). A legally binding agreement, it allows you to repay your creditors a percentage of what is owed in exchange for full debt forgiveness.
With this program, it is possible to write off up to 70% of what you owe. It can eliminate almost all unsecured debt including credit card debt, bank loans, payday loans, tax debt, and some student loan debt. It does not affect your primary residence mortgage or a secured car loan; you are allowed to keep your assets, including your tax refund.
The program is governed by federal law and is regulated by Industry Canada. Because this is a legal process, it puts an end to collection appeals, wage garnishment, and any legal action that may have been taken by your creditors to collect.
The only way to file a consumer proposal is to go through a trustee; The IADs themselves are heavily regulated by the government. They make sure that the amounts they pay are fair to both the declarant and the creditors.
A debtor may find that he does not have the budget or the capacity to fully repay his debts, but he is ready to pay something. If, for example, they owe $ 100,000 to various creditors, they may only be able to repay $ 50,000.
“A lot of people by nature want to pay,” Sugeng explains. “They want to repay what they can while being able to take care of their families. They don’t come to a trustee to get a free ride or get a free prison release card. Unfortunately, some people are faced with an adverse event in their life that has affected their ability to pay. “
Your trustee will help you determine the amount to reimburse, taking into account your assets and your living expenses. They will offer you a monthly amount that is affordable for you. Payments can be spread over a maximum of five years and the total repayment term is interest free.
A trustee helps the consumer prepare an offer to his creditors to settle their debts, which is then submitted to their creditors as a group. The group votes on whether or not to accept the proposal and your trustee manages the negotiation process.
With a consumer proposal, the creditor gets more than they would receive in bankruptcy and the person filing the case gets much needed financial relief.
When you meet a trustee, the consultation is free. They’ll spend about an hour asking questions and learning about your financial situation, and then they’ll come up with a plan to help you. You will not make any payment in advance; trustees are only paid once the work has started.
You may even find that your financial situation is not as bad as you thought. A trustee will share financial advice and help you get on the right track.
Make sure you choose a licensed operator. The license isn’t something to worry about, Sugeng assures, it just means your trustee is regulated by Industry Canada and overseen by the government, which is a good thing. They are held to a higher standard and are regularly audited.
Finally, contacting an insolvency firm doesn’t mean you’ve done anything wrong. The phone call to make an appointment is often the hardest part. Most feel immense relief after speaking to a trustee and wish they had done so sooner.
Call Fontaine & Associates to book your free consultation today.