Consumer Proposal in Ontario
The rise of the general level in prices is certain as the years went by. The slow rise of the economy from recession is accompanied by the increase of consumer goods and commodities. This set up is similar to what happens in Ontario Canada. The big puzzle though is the tendency of which this price rate will go up.
In the first quarter of 2013, there was a low increase in the consumer price garnering an average of 1.2% from 2012. This implies a positive outlook that the residents’ income can adequately keep up with the rise of consumer prices.
In contrast, the moderate rise of consumer prices may be tolerable for some, but not for everyone. This is true to those residents who are currently struggling in paying their debts. As their income is insufficient to cover their obligation, the more burden they will have as they spare extra expenses on goods, commodities, and services. An evident implication is perceived with Canadians household debt amounting to approximately $27,500 in the same year. The more alarming notion is anticipated as debtors will likely increase their debt in relation to the increase in consumer prices.
If you’re one of the residents in Ontario who’s struggling to cope up with your debt payments. There are certain alternatives that can free you from indebtedness. You can seek to qualify for the different debt solutions in Canada. One of this debt solution approach is a consumer proposal.
In This Guide...
What is a Consumer Proposal in Ontario?
A consumer proposal in Ontario is designed for those who cannot satisfy the minimum payment of their debts each month. It is known as an alternative prior to filing for bankruptcy. Residents who want to keep their assets will likely file for a consumer proposal rather than bankruptcy. If you wish to file for a consumer proposal, you must need to contact a licensed bankruptcy trustee. Your trustee will construct a proposal that has to be accepted by the creditors representing 51% of your total debts.
Once your proposal is accepted by the simple majority, your other hostile creditors are compelled to follow the proposal’s terms. With the consumer proposal in effect, you will be paying less than what you owe with the interest frozen, and the principal is reduced. Moreover, for you to qualify for a consumer proposal, your debts should not go beyond $250,000 and $500,000 for married couples filing jointly. You are also obliged to follow the agreed terms of payment to avoid the annulment of your proposal.
What are the Pros and Cons of an Ontario Consumer Proposal?
PROS
- A consumer proposal is a convenient way to pay for your debts, especially if you have several creditors. Your debt is consolidated and you’ll only be paying a single payment to your trustee.
- It secures and protects your assets from your creditors, who can potentially claim it.
- It prohibits debt collectors from calling you and collecting payments.
CONS
- Your consumer proposal will be annulled automatically if you missed 3 payments.
- It can impact your credit repute severely, which makes it hard for you to secure a loan or credit for 7 years.
- Though it negotiates for payment terms that you can afford, the agreed offer might not be always favorable to what you afford.
Find Out More
It does not necessarily mean that a consumer proposal suits you when you have a large number of debts. There are other debt-relief options that may be suitable for your situation. If you are still uncertain which debt solutions is right for you, FIND OUT MORE.
