When debts start piling up and become hard to manage, stress can quickly take over. If you’re going through a difficult financial period, it is important to know that legal options exist to help you regain control of your finances.
One debt relief option is a consumer proposal, which allows you to reduce your debts and avoid bankruptcy. This process creates a clear, structured plan to ease your financial obligations and help you get back on solid footing, moving closer to a debt-free future.
A consumer proposal is a legal solution supervised by a Licensed Insolvency Trustee, who can file the application with the Office of the Superintendent of Bankruptcy (OSB).
The goal of a consumer proposal is to lighten your financial burden by creating a legal agreement between you and your creditors. This agreement often provides for a reduction in the total amount of debt and a structured repayment plan based on what you can afford. Tax debt can also be included in a consumer proposal.
A consumer proposal can only be initiated by a Licensed Insolvency Trustee. This is the only professional legally authorized to file a consumer proposal with the OSB.
The initial consultation is often free and allows you to discuss your financial situation with the trustee. They will conduct a complete debt assessment, which will help them in creating a payment plan that fits your monthly budget. This plan is then submitted to your creditors for approval. Once the agreement is finalized, you must fulfill your obligations according to the terms of the proposal.
When you want to reduce your debts, a consumer proposal offers several benefits to help you regain financial stability:
If the proposal is not the best solution for you, other options may be considered depending on your situation. During your meeting, the trustee will present all possible approaches and offer personalized support, regardless of the solution you choose.
This option lets you combine all your debts into a single monthly payment by taking out a new loan. The loan is used only to pay off your existing debts. This can be helpful because the new loan often has a lower interest rate than credit cards or personal lines of credit.
However, it is important to note that this solution is only available to people with a good credit history, which is needed to get the loan. It also does not reduce the total amount you owe, and missing payments can affect your credit rating.
Debt consolidation is best for those who can still manage regular payments. It offers the opportunity to reorganize finances without having to declare bankruptcy or make a consumer proposal.
Personal bankruptcy is considered a last resort. However, for people with heavy debts, it’s a legal solution that allows them to effectively wipe out most of their unsecured debts.
By filing for bankruptcy, you agree to transfer part of your assets to your trustee. The trustee then liquidates these assets to repay part of your debts to your creditors.
Bankruptcy can offer a fresh start when financial pressure becomes unbearable. However, it is essential to fully understand the consequences of this solution before beginning proceedings:
Although it has more serious consequences, bankruptcy remains a quick, effective, and definitive solution to help you regain your financial stability when other avenues are not possible.
If you are struggling to manage your debts, a consumer proposal provides a structured way to take back control of your finances and avoid bankruptcy. While the consumer proposal does affect your credit rating, it is often a better option than personal bankruptcy. For professional, personalized guidance, consult M. Roy & Associés in Laval to find the best solution for your situation.
