Consumer proposals are government-backed unsecured debt settlements that you get into with your creditors. It serves as an excellent alternative to bankruptcy, as it saves your assets from liquidation. It also makes a recovery from debt possible and allows you to rebuild your credit. Consumer proposals are only helpful if you can make reduced payments and want to avoid bankruptcy. Some of the most commonly experienced advantages are listed below:
It can reduce your unsecured debts by more than half.
It will allow you to make reduced payments while enabling you to avoid bankruptcy.
You will be able to consolidate all your debts into a manageable fixed monthly payment.
It is a safe and legal way to settle all your unsecured debts.
You will be able to exercise damage control on your credit ratings
Be able to recover from overwhelming debt in a more efficient manner
The main disadvantages of filing a consumer proposal for the debtors can be simplified as follows:
It doesn’t cover secured loans, so those won’t be reduced as a part of your payment plan.
Upon entering a consumer proposal, your debts will be written off, and as a result, your credit ratings will suffer.
To get into a consumer proposal, you will have to consider a high-risk borrower.
There are chances that your student loan may not qualify for a consumer proposal.
However, it should be appreciated that a consumer proposal is not your last option to deal with debt or liquidation. It is most suited for those who owe a considerable amount of unsecured debt and have a monthly income that they can make payments with. People with secured debts who lack a stable monthly income can opt for bankruptcy, debt consolidation, or debt counseling. It is best to consult an expert when weighing your options and facilitate you where needed.