Advantages and Disadvantages of Consumer Proposals

You are not able to keep any current credit cards you have when you file a consumer proposal.  You can get a secured credit card and start rebuilding your credit right away.

A consumer proposal is a legally binding agreement between you and your creditors to only pay a portion of your debt.  Your creditors are likely to agree to the consumer proposal because they will get more money than in a bankruptcy. Once filed it immediately stops all collection action against you.

A consumer proposal will stay on your credit report for 3 years after you have paid off the proposal, or 6 years after your proposal was filed, whichever is first.

You will not pay anything extra for a consumer proposal.  The cost of the proposal comes out of your agreed upon monthly payments to your creditors.

PROS

• Avoid bankruptcy.
• It immediately stops legal action from unsecured creditors, including wage garnishments, bank account seizures and unencumbered asset seizures.
• It instantly protects you from receiving collection calls from your unsecured creditors.
• Unsecured creditors are now required to communicate with the Proposal Administrator instead of you.
• No more interest on your debt.
• One affordable monthly payment may be made to your Proposal Administrator instead of multiple payments to individual unsecured creditors.
• Each monthly payment made to the Proposal Administrator pays your unsecured creditors and pays the Administrators fees.
• No additional costs, payments or interest charges apply beyond your single monthly payment to the Proposal Administrator.
• Flexible payment options are available. Plus you have the option to prepay at any time to help reduce the length of the consumer proposal.
• It allows a director of an incorporated business to maintain his or her position.

CONS:

• Stable monthly income is required to ensure you can pay the Proposal Administrator consistently.
• Your ability to make payments to the Proposal Administrator must be demonstrated through income verification and your monthly household budget.
• Acceptance of the consumer proposal is subject to a majority (50% or more) vote by your unsecured creditors.
• If multiple payment defaults occur, the consumer proposal is cancelled,  which allows your creditors to collect the full amount of your debt.

For many people you will have to wait for 2 years after your proposal is paid off.  If your goal is to get a mortgage start building a relationship with your banker or a mortgage broker.

Yes a consumer proposal is worth it.  It is one of the best safe and secure ways to deal with your debt.  You still get to keep your assets, have one lower monthly payment interest free to deal with all your unsecured debt.  Best of all you avoid bankruptcy.

Yes, you can keep your car and any other assets you may have as long as you keep making the payments on them.