DEBT RELIEF OPTIONS IN MISSISSAUGA, ONTARIO
Consumer Proposal
One of the most efficient solutions to crippling debt is a consumer proposal, whether you are struggling with credit card debt, tax debt or personal loans.
A consumer proposal might be the right solution if you don’t qualify for a debt consolidation loan, can’t repay all of your original debt, or your debt outvalues your assets.
A consumer proposal is a legally binding contract between you and your creditors that consolidates your debt and settles it for less than you owe. With our Licensed Insolvency Trustees (LIT), you will review your financial situation to determine if a consumer proposal is the right solution. Then we will assess a realistic monthly amount you can afford. Your LIT will then submit the proposal to your creditors for approval, and once this is obtained, you will make monthly payments; after all conditions of the consumer proposal are fulfilled, the remaining debt is discharged.
The most significant benefits of a consumer proposal are:
- Discharge up to 75% of your debt
- Stop all legal action, such as wage garnishments or frozen bank accounts
- Stop all collection calls
- Keep all assets, including tax refunds
- No additional interest on any debt included in the proposal
Please note that only LIT like Chande Debt Solutions are allowed to file consumer proposals.
Debt Consolidation vs. Consumer Proposal
Many Canadians try to compare debt consolidation and a consumer proposal, weighing their benefits and drawbacks. Whereas the former has no adverse effect on your credit score (as long as you continue to make payments on time) and don’t have to worry about dealing with anybody else but your financial institution, there also are some significant drawbacks to a consolidation loan.
Many loans, whether personal or home equity, can come with very high-interest rates and depending on your credit and payment history, you may not qualify in the first place. Another drawback of a consolidation loan is that you are allowed to keep credit cards and other sources with high-interest rates, so unless you adjust your spending habits, it does not fix the underlying issues of some of the financial problems.
On the other hand, while a consumer proposal will affect your credit score and you can only cover unsecured debts (i.e. credit card debt, personal loans, tax debt or, depending on their age, student loans), its benefits are significant. You can discharge up to 75% of your debt owed, stop all legal action and collection calls, and any additional interest on the debt included in the proposal.
Personal Bankruptcy
Unfortunately, in some circumstances, you don’t have many choices. Generally, personal bankruptcy is the radical last resort when all other options are exhausted. While it is a quick and cheap solution to your debt problems, it also severely impacts your credit score, and you will lose any non-exempt assets.
