What are the pros and cons of consumer proposals? Here’s the answer

Consumer proposals are a useful tool for people who are struggling with debt. They can help you reduce your debt, and they can help you keep your assets. However, consumer proposals have some drawbacks. Here are the pros and cons of consumer proposals.

No monthly reports 

One of the biggest advantages of this process is that there will be no reports at the end of the month. You can simply use a consumer proposal calculator to see how much debt you can pay off and how long it will take. There are no minimum monthly payments, so you can make the best decision for your financial situation.

Some people may see this as a disadvantage because they want to be able to track their progress. However, consumer proposals give you the chance to focus on paying off your debt without having to worry about reports or minimum payments. 

Keeping all assets 

You’ll be able to keep all of your assets if you make a consumer proposal. This can be a huge advantage if you’re worried about losing your home or your car. A consumer proposal is also less damaging to your credit rating than bankruptcy, so this can be an important consideration if you’re worried about the long-term effects on your financial life.

There are some disadvantages to consider as well, of course. You’ll still have to make payments each month, and these payments will be higher than your current monthly expenses. The total amount you owe will also increase since interest will accrue on the outstanding balance. 

And finally, there’s always the risk that your proposal will be rejected by the creditors. If this happens, you’ll have to either renegotiate with your creditors or consider bankruptcy.

Relief from collection calls

Collection calls can be pretty stressful. If you’re struggling to make ends meet, the last thing you need is someone calling you and demanding money. Fortunately, one of the advantages of consumer proposals is relief from collection calls. Once you’ve filed a proposal, your creditors are no longer allowed to contact you directly. Instead, they have to deal with your licensed insolvency trustee (LIT).

So if you’re being harassed by creditors, a consumer proposal may be a good option for you. It can give you some much-needed peace of mind during a difficult time.

Of course, there are other advantages and disadvantages of consumer proposals that you should consider before making a decision. But relief from collection calls is definitely one of the pros. So if that’s something you’re looking for, a consumer proposal may be worth considering.

Creditor protection

Consumer proposals will also provide you with creditor protection. This means that your creditors cannot take any legal action against you, and they are also legally bound to stop calling you for payments. If you’re struggling to keep up with your debt repayments, creditor protection can provide some much-needed relief.

There are a few disadvantages to consumer proposals, but the advantages far outweigh the disadvantages for most people who are struggling with debt. If you’re considering a consumer proposal, be sure to speak to a qualified financial professional to get more information and find out if it’s the right solution for your situation. 

Time-consuming 

Unfortunately, consumer proposals can be time-consuming. The process can take up to five years, and during that time you’ll have to make regular payments. If you’re not careful, you could end up in a worse financial situation than you were in before you started the proposal.

There are some advantages to consumer proposals, but they come with some significant drawbacks. Before you decide if a consumer proposal is right for you, make sure you understand all of the pros and cons.

If you’re considering a consumer proposal, talk to a qualified professional who can help you weigh your options and make the best decision for your unique circumstances.

The terms 

There are also certain terms that can be disadvantageous in a consumer proposal. For example, the length of the repayment period is usually set at five years. This means that you will have to make payments for five years before your debt is considered settled. Additionally, during the repayment period, you are not allowed to take on any new debt. 

If you do, the proposal may be null and void and your creditors can pursue other legal action against you. Finally, if you miss even one payment, the proposal can be canceled and your creditors can demand the full amount of your outstanding debt immediately.

Consumer proposals can help you out a lot as there are no monthly reports, and you won’t lose any assets. It’ll be a relief from collection calls and will provide protection to creditors. However, this process is pretty time-consuming, and you have to respect the strict terms to succeed. It’s a very good option, but you do need to be patient and precise!

27/06/2022