Is it time to file a Consumer Proposal? – Tips from Ted

by Ted Michalos on January 23, 2012

Our last couple of posting were all about how to save for next Christmas. Of course you may not be able to do that if you are bogged down with thousands of dollars in debt. If that’s the case then it may be time for you to look at filing a consumer proposal.

A consumer proposal is a legal procedure whereby you repay a portion of what you owe. The idea is simple, if you can’t afford to repay everything that you owe, maybe you can afford to pay back part of it.

When you file a consumer proposal creditor calls will stop. If a debt has gone to collections, even if they’ve taken legal action against you, when you file a consumer proposal the calls will stop.

When you file a consumer proposal interest charges will stop. How many times have you said to yourself, “all I am doing every month is paying the interest – the debt never goes down!” When you file a consumer proposal every payment goes towards the debt – there are no new interest charges.

When you file a consumer proposal you will be encouraged to save. The last two articles were about saving for next Christmas instead of relying on credit. If your excuse for not saving has been that you’ve got too much debt a consumer proposal will solve that problem and deal with the debt. You will be able to save.

Does all of this sound too good to be true? Well, it is true – it’s the law. The biggest down-side to a consumer proposal is that you will not qualify for any new credit while you are in the proposal and for two or three years afterwards. How many times have you said to yourself, “I’d stop using my credit cards if I had any money left over after paying the bills each month, but I never do because the bills are too high…”

One word of warning – be careful who you deal with. Consumer proposals may only be filed by licenced trustees in bankruptcy. There are dozens of scam artists (most call themselves debt consultants or credit counsellors) that will offer to reduce your debt by up to 70%. They do so by charging you a fee and then referring you to a licenced trustee to file a consumer proposal. Save yourself the fee and call us directly.

If you’ve got more debt than you can deal with then a consumer proposal may be right for you. Give us a call to learn more.

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