Is a consumer proposal worth it? Although sometimes confusing, a proposal maybe worth it when you consider the long term benefits. When a client comes to us with financial issues, we go over their finances to help them decide is it better proposals or bankruptcy…
When is a Proposal Worth Doing?
Proposals may be worth it when:
- you’re having trouble or are unable to pay your debts
- you’re receiving collection calls and letters
- the debts are more than $1,000 and less than $250,000
- your wages have been or are about to be garnisheed
- you want to avoid filing for bankruptcy
When your debts are one to two thousand dollars we do not believe that this insolvency route is worth it. The long term costs in relation to your credit rating would not be worth while, and credit counselling maybe a better option.
Proposals vs Bankruptcy
A proposal maybe worth it when you consider the advantages over filing for bankruptcy such as:
- you do not lose all of your assets, e.g. home and car
- debts can be reduced dramatically, e.g up to seventy (70) percent
- garnishees are immediately stopped
As well any interest is stopped and creditors cannot call or harass you once the proposal is filed in court.
In bankruptcy the bankrupt, must:
- submit monthly reports
- surrender all assets to the court
- surplus payments maybe required
The biggest differences between proposals and bankruptcy are that in bankruptcy you must surrender assets that you own, and where your income changes you maybe required to make surplus payments (pay extra as your income increases).
How Credit Ratings are Affected
Many times people are concerned about how a proposal or even bankruptcy will affect their credit rating.
The answer is that regardless what route taken an insolvency either through proposal or bankruptcy will affect your credit rating for about seven to eight years.
Most people considering financial help are already in a position where their credit rating is already bad. The credit rating is either bad because of missed or late payments or payments that are in default.
Subsequently having the credit rating fall due to insolvency is not going to be something unheard of or unexpected.
The process of restructuring and getting rid of debt with the added help of counselling is usually a positive process that helps you to rebuild your credit and financial habits.
Start Rebuilding Your Credit
It may have taken years for your credit, liabilities and obligations to reach the level they are today, and likewise rebuilding your credit will take time.
The first step is to arrange to speak with an insolvency trustee to discuss your finances for a solution that will fit for you. In the past our staff at YanchDey has helped hundreds of people rebuild their credit and lives. Stopping harassing calls, letters and garnishees of wages and we can help you.
As we’re sure you’ve heard before, if you could of done it by yourself you would have done it by now. Let us help you through the process to live debt and stress free. There is no cost to call or speak to us, and appointments are available today. Call us today at 905‑721‑7506.i
About the Author
Kelly Dey is a licensed trustee in bankruptcy throughout Ontario.
As a Trustee, Kelly is licensed and regulated by the Superintendent of Bankruptcy to administer proposals and bankruptcies. She continues to actively consult and provide guidance to those seeking to financial advice.
Yanch Dey & Associates Ltd. offers a wide range of bankruptcy and debt management services in the GTA, Durham Region and County of Northumberland.