What Are the Upsides of Filing a Consumer Proposal?

When you are in a difficult place with your finances, do you know where to go? Do you know what to do? For many people, living with burdensome debt can take a toll on their health and personal lives, too. When it seems like there are no options, there are often more ways out of debt than you know. 

One often overlooked way to find debt relief is through filing a consumer proposal. Let’s take a look at  the advantages of a consumer proposal and the benefits of this form of government-regulated debt relief. 

A consumer proposal is a viable alternative to declaring bankruptcy in Canada. Choosing the right solution depends on your specific situation. The main benefits of a consumer proposal in Ontario can be summarized as follows:

  • The insolvent person gets to keep their assets
  • Your debt is rounded up into one lower monthly payment
  • It’s a government program so it’s regulated and sage
  • Consumer proposals provide creditor protection and court approval
  • You can pay off a consumer proposal in a shorter period of time
  • You avoid bankruptcy through a consumer proposal

Businesses and Consumer Proposals

You’re all in, you’re raring to go, and you have a vision for the future. As a business owner and operator, you know that the road to success will be a long and winding one, which means that you should be prepared for the best as well as the worst. There are going to be difficult times and tough moments in the life of your business, but with a good team and a cool head, you can weather any storm. 

But life happens and things change, which can often take a serious toll on a business and its employees. It is not uncommon that business owners lump all of their money into one pot. They consider personal and business assets, debt and cash flow as one and the same. 

Making the distinction between business and personal expenses is essential to properly managing any business. The owner needs to understand whether or not the business is making money and whether he/she is able to maintain the standard of living he or she expects. Doing otherwise leads to confusion, bad decision making and overspending.

Business assets – for example, equipment, vehicles and merchandise – are often paid through a mix of personal and business financing (loans, personal credit cards, or lines of credit). Banks require the owner to sign off personal guarantees in case the business defaults on the payments. It’s not unusual for the line to become blurred between what is personal and what is business. Bankruptcy trustees will read through the contracts and loan agreements and determine what the owner’s exposure is. From there, your LIT can determine which option best fits your case.


Stopping Collection Calls and Wage Garnishment

One great thing that a consumer proposal does is that it puts an immediate stop to all creditor action against a debtor. This includes most wage garnishments and calls from creditors and collection agencies. Once you sign your proposal documents, they will be electronically filed with the government and you immediately gain protection from your creditors.