Consumer Proposal Payment Plans
In a consumer proposal your debt is reduced to one lower monthly payment. You and the proposal administrator decide on the monthly payment that you can afford to pay off the debt in 3 to 5 years.
Making Payments in Consumer Proposals
Monthly Payment Plans
When a consumer proposal is filed the Insolvency Trustee will have made a proposal to your unsecured creditors (the people you owe money to). The proposal will have given the creditors an option to accept a reduced amount on the debt whereupon you the debtor will pay them an monthly amount.
The amount of the payment will be decided by you and the Insolvency Trustee working together to make a budget that you can affordably pay. The goal is to pay off the debt as quickly as possible while allowing you to manage your finances.
When making monthly payments the debt is made out over a maximum period of five years. The amount would be divided by 60 months and that would be the monthly payment, for example;
- debt amount = $10,000
- divided by 60 months = $10,000 / 60 months
- equals $166.66 per month
The monthly amount maybe be increased over the 60 months to pay off the debt sooner, but not decreased.
Back Ended Payment Plans
In a back ended consumer proposal the payment start small and increase over time. For example,
- Year One – Monthly payment 150 dollars per month
- Year Two – Monthly payment 200 dollars per month
- Year Three – Monthly payment 275 dollars per month
- Year Four – Monthly payment 300 dollars per month
- Year Five – Monthly payment 350 dollars per month
The increased monthly payments in a back ended consumer proposal allows you to get on your feet during the first part of the proposal and then to gradually increase the payments over time and as your financial situation improves.
This type of consumer proposal is best suited for people who expect their job situation to improve and other secured debts e.g. your mortgage to decrease over time.
Front Ended Payment Plans
In a front ended consumer proposal the debtor may have some funds available to pay down on the debt. When we review your financial situation we may find for example that you can get rid of a car, or sell something that you don’t need to put money on your debts.
Some people considering a consumer proposal know that they will be facing a retirement or reduced income in the future so the debt repayments may start off higher but be reduced over time.
- 250 per month for the first and second year
- 175 per month in the third year
- 100 per month for the forth and fifth years
The goal with any consumer proposal is for you to start the process to make monthly payments that are affordable to you to pay of the debts and to repair your credit history.
What every your financial situation speaking with one of our Licensed Insolvency Trustees is free. We discuss your options and create a payment plan to get you out of debt that suits your situation. Appointments are free and without obligation, call us today to become financially healthy >
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This site is for information only and is not meant to replace qualified legal advice by a Licensed Insolvency Trustee the writers shall not be held responsible for any information that may be incorrect or out of date in regards to consumer proposals. The owners of this website recommend that anyone wishing to learn about how a trustee can deal with your financial issues should contact our office.