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Facing overwhelming debt can be stressful, but a consumer proposal offers a manageable path to financial recovery. At The Mortgage Doctors Oshawa, we specialize in guiding clients through the process of filing a consumer proposal, an effective alternative to bankruptcy that allows you to consolidate your debts and make a single, affordable monthly payment. This legal process, administered by a licensed insolvency trustee, helps you negotiate with creditors to pay a fraction of what you owe, thereby providing relief and a fresh start. Let us help you understand how a consumer proposal can be a stepping stone to regaining your financial stability.
Consumer proposals can be a solution to managing overwhelming debt. Once you realize that there is no way to carry high interest rate payments, a trustee can assist in negotiating with creditors to ease the burden. On average it takes 5 years to pay out a consumer proposal, but you can shorten the time if you have equity in your home.
Lenders that will consider refinancing a consumer proposal want to know that you have paid the agreed amounts for a minimum period of 1 year. An appraisal of the property will determine if there is enough equity to pay out the balance of the proposal. If the numbers work, then either a new first mortgage or a small second mortgage is prepared.
In most cases, a second mortgage is the best choice. Breaking a first mortgage can mean paying a penalty, and the first mortgage is generally at a favorable rate. Breaking it for another mortgage with a higher rate isn’t optimum. Since you are paying out a consumer proposal you will be viewed as having bad credit. Therefore, the mortgage set up to pay out the owed balance will be a higher rate.
Choosing a consumer proposal over other debt relief options can provide several advantages:
Typically, you only pay a portion of your debts, significantly reducing the total amount owed.
From the date you file, interest stops accumulating on your debts, helping to halt the growth of your financial burden.
Once filed, creditors cannot take legal actions like garnishing your wages.
While affecting your credit, a consumer proposal is often viewed more favorably than bankruptcy in terms of future financial opportunities.
The process of filing a consumer proposal involves several detailed steps, which we will navigate together:
Meet with our financial advisors to discuss your debt situation and explore whether a consumer proposal is the right solution for you.
We will connect you with a trusted licensed insolvency trustee who will evaluate your financial affairs and prepare the proposal.
Your trustee will send the proposal to your creditors, offering to pay a portion of your debts over a specific period.
Depending on the amount of your debt, creditors may call a meeting to vote on your proposal. Approval requires a majority in dollar value of the creditors who vote.
Once approved, you make regular payments to the trustee, who distributes funds to creditors. Upon fulfilling all terms, you are legally released from the debts included in the proposal.
It’s natural to have questions about entering into a consumer proposal. Our FAQ section addresses common inquiries to help clarify this financial tool:
A consumer proposal is a legally binding agreement facilitated by a licensed insolvency trustee that allows you to pay creditors a percentage of what you owe them over a set period, with the remaining debt forgiven.
A consumer proposal is often considered less severe than bankruptcy. It allows you to retain your assets and requires you to repay only part of your total debts, whereas bankruptcy may require surrendering certain assets to discharge debts.
To qualify for a consumer proposal, you must owe less than $250,000 (excluding the mortgage on your primary residence), be unable to pay debts as they become due, and possess sufficient stable income to make monthly payments.
Most unsecured debts, such as credit cards, unsecured loans, and lines of credit, can be included. Secured debts, such as mortgages and car loans, cannot be included.
A consumer proposal can last up to a maximum of five years, during which you make monthly payments to a licensed insolvency trustee who then distributes these funds to your creditors.
Yes, filing a consumer proposal provides a stay of proceedings, which stops all collection calls and wage garnishments immediately upon filing.
A consumer proposal is filed by an individual and does not directly affect your spouse. However, if you have co-signed loans or joint debts, your spouse may still be responsible for these debts.
A consumer proposal will appear on your credit report for three years after you complete the payments. It is noted as an R7 credit rating, which indicates that you made a settlement with your creditors.
Yes, you can pay off your consumer proposal earlier than the agreed term without penalty. This can help you improve your credit score faster.
If you miss three payments, your consumer proposal can be annulled, which means your creditors can resume collection actions against you. It’s crucial to communicate with your trustee if you foresee difficulties in making payments.
Our experienced team of mortgage brokers can determine your maximum mortgage amount, what your payments are likely to be and options that are available to you. Our goal is to find out our client’s mortgage needs and long term financial goals and provide solutions to meet those needs. Call us at (905) 404-8001 or (866) 452-1100 (toll free) for more information.
Consumer proposal may be right for you if:
* Having trouble paying all your bills, even though you have a good job?
* Thinking about filing bankruptcy, but not really wanting to?
* Simply looking for more information about ways to deal with your debt?
A Consumer Proposal is suitable if:
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For you the consumer:
Why would your creditors accept a consumer proposal where they are getting less than the full amount they are owed? In most cases they don’t want you to go bankrupt. A Consumer Proposal is better for them because even though they may not get all of their money, they are getting more than they would get in a bankruptcy.
A Consumer Proposal will not:
If you would like more information please use the form below or apply on-line and let us help you.
Oshawa, Ontario L1G 5N3
(905) 404-8001
(866) 452-1100
info@themds.ca
The Mortgage Doctors is Durham Region’s Mortgage Superstore. Our Mortgage Brokers use their expertises to advise and obtain approvals on mortgage financing that fits your mortgage needs.
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