There are few things as stressful about modern life as debt, and if you’re not smart about managing your debt, it can quickly take over your life. If you apply for financing for a new car or a mortgage, and your loan is refused because of your bad credit and existing debt, you can feel stymied, stuck riding the bus or living in a cramped apartment. But it can get worse: creditors can sell your debt to collection agencies that use harassment tactics to collect; your wages can be garnished, preventing you from saving or even keeping up with living expenses; ultimately, you could even be facing bankruptcy, ruining your credit rating and losing your assets.
If you’re missing payments, using your credit card to pay basic living expenses, and trying to balance multiple types of debt, the sooner you learn about a Consumer Proposal, the better. It can help give you breathing room, for example, to make mortgage payments, and rescue you from entering bankruptcy.
What Is a Consumer Proposal?
A Consumer Proposal is an agreement with your creditors to restructure your debt, meaning that you will pay less and have longer to pay it without interest accumulating. A Licensed Insolvency Trustee will contact all of your creditors, who will then vote on it. They do not have to accept your Consumer Proposal, but most of the time, the majority of your creditors will accept a Consumer Proposal, as they may risk getting nothing if you declare bankruptcy.
Consumer Proposals can only be handled by Licensed Insolvency Trustees; in Toronto, Licensed Insolvency Trustees like David Sklar & Associates specialize in Consumer Proposals, as well as bankruptcy and debt management counselling.
Bankruptcy versus Consumer Proposals
The difference between bankruptcy and a Consumer Proposal is that the latter keeps you in control of your assets and your debt. If you declare bankruptcy, all of your non-exempt assets, such as property or investments (except most RRSPs) will be liquidated, and the proceeds will go to your debtors. Bankruptcy can quickly wipe out your savings and investments, whereas a Consumer Proposal gives you a chance to get your debt under control and maintain the life you’ve built for you and your family.
What Is a Licensed Insolvency Trustee?
In Toronto, Licensed Insolvency Trustees like David Sklar & Associates help people get out of a debt crisis. While they can also help you with the process of declaring bankruptcy, their priority is to get you out of debt, and almost always recommend a Consumer Proposal first. The smartest thing to do when you feel debt mounting or start getting collection calls is contacting a Licensed Insolvency Trustee. The sooner you get a hold of out-of-control debt, the better.
Getting yourself out of debt can be done with the right help. If you get on top of your debt before you enter crisis-mode and get a Consumer Proposal with the help of Licensed Insolvency Trustees like David Sklar & Associates, you can dig yourself out without losing everything. When you’re facing garnished wages, relentless collection calls, and mounting debt, you need someone to help dig you out.