What is a Consumer Proposal?
A consumer proposal is a negotiated settlement between an individual and their creditors. It acts as an alternative to bankruptcy allowing the consumer to pay back a portion of their debt, while offering the creditors a chance to get back more money than a bankruptcy would allow. A consumer proposal is similar to debt consolidation, in that it can convert multiple loans into one monthly payment. It still however has many parallels with a bankruptcy.
Just like filing a bankruptcy in Ontario, a consumer proposal requires you to obtain the services of a licensed trustee to initiate and manage the proposal process. While it remains similar to both debt consolidation and a personal bankruptcy, the consumer proposal is still very different in both its procedure and its advantages.
Unlike a traditional personal bankruptcy, a consumer proposal lasts longer (in most cases 5 years). This allows you to resolve a portion of your debt over an extended time, while still letting creditors receive a bigger portion of the debt they are owed. Here are some specific advantages to a consumer proposal in Ontario:
Advantages to a Consumer Proposal
Is a Consumer Proposal Right for You?
That is a very important question that doesn’t have a simple answer. If you are considering a consumer proposal, it is very important that you do your research. You need to research the trustee in bankruptcy you want to work with but more importantly you also need to think about your needs, your credit situation and your goals.
Sometimes it may be better to file a personal bankruptcy than it would be to file a consumer proposal. It’s also important to remember that filing a bankruptcy or consumer proposal might not be the right move at all. Don’t let bad advice or being unprepared push you into a situation that may not be right for you. Here are some basic situations that might help you decide if a consumer proposal is right for you:
Consumer Proposal and Auto Loans in Ontario
If you live in Ontario and you’re discharged from a consumer proposal or even still in proposal, then you can be approved for an auto loan. Some of the major banks and their smaller counterparts offer special bankruptcy car loan and consumer proposal auto loan programs that allow individuals inside a consumer proposal or discharged from a proposal to finance a car loan. A consumer proposal auto loan is not limited to used vehicles or new cars. You can be qualified for any new or used car you choose.
When searching for an auto loan, the variables, like traditional auto financing are your affordability and your needs. If a car dealership or finance company tries to tell you, that it’s impossible to be approved for an auto loan when in a consumer proposal or you are only approved for a smaller, older used car, then they don’t deserve your business.
Making regular monthly payments in your consumer proposal is how you settle the debt you owe your creditors and also how you re-establish bad credit. Since making regular monthly payments is so crucial to a consumer proposal, your ability to earn regular income and make those payments on time is most important. Recently many finance companies have started to take a positive approach to this catch 22 and have designed auto loan programs that allow consumers in proposal to finance a new car or used car while they settle their debt via bankruptcy or consumer proposal. After all, how can you afford to make your payments to the trustee if you can’t drive yourself to work!
Make the Right Decision for You
Please, if you’re debt or credit situation is leaving you struggling or thinking about filing for personal bankruptcy or consumer proposal take the time to consider your goals both short term and long term, do your research, find a qualified and licensed trustee that you’re comfortable with and make sure the decision you make, is right for you.
If you file for consumer proposal, show a positive proposal
payment history for at least six months and have a qualifying job, then
you may be approved for auto loan financing. Car Credit Hero
located in Port Hope Ontario and servicing the Oshawa, Peterborough, Trenton
and surrounding areas, works closely with finance companies and banks that
can approve your car loan, even if you’re in
a consumer proposal.