Consumer Proposal

Consumer Proposal As An Alternative To Bankruptcy?

Going through the bankruptcy process can be very stressful and it can definitely harm you financially for years to come. Some credit counsellors and bankruptcy lawyers are suggesting you try and create a consumer proposal and offer it to your creditors.

A consumer proposal is an alternative to bankruptcy, but for many debtors and creditors it isn’t an easy button.

You add up your debts and obligations, calculate your income, and make a proposal to pay what you can, for as long as you can to those creditors. This can be done on your own, but usually through an attorney of bankruptcy law firm or trustee.

The creditors usually receive less than the full value of their debt. Depending on their situation they might prefer to get something (pennies on the dollar) versus nothing (if you have no tangible assets)

The choice is up to your creditors.

Don’t think that once your creditors accept a consumer proposal everything goes back to normal. First, you must keep up with scheduled payments or those harassing phone calls will start again. If you fall behind you will be probably forced into declaring bankruptcy.

And, your financial record isn’t wiped clear. All your delinquencies will still show on your credit report. It won’t be impossible to get credit (and probably much easier than if you file for bankruptcy), but you will have a hard time finding favorable terms and credit while working through a consumer proposal.

Most personal bankruptcy law firms and attorneys will give you a free consultation to discuss your situation. Arrange one or two of these and make sure you ask their opinion on a consumer proposal versus bankruptcy for your particular situation.