Guide to Know About Consumer Proposal & How Does It Differ from Bankruptcy?

You've probably heard the term "consumer proposal Calgary" But do you truly understand what it means? And do you understand how it differs from bankruptcy?

Consumer proposals and bankruptcies help you get out of debt and improve your monthly cash flow. However, they accomplish these goals in very different ways.

This blog post will define a consumer proposal, explain how it works, and explain why filing for a consumer proposal may be preferable to filing for bankruptcy.

What is Consumer Proposal, & How Does It Work?

A consumer proposal is a formal agreement reached with creditors to whom you owe money. A consumer proposal is an alternative to bankruptcy for dealing with debt. It safeguards you against creditors who seek immediate debt collection, sometimes through legal action.

Instead of paying creditors directly, you'll make payments through the LIT you're working with when filing a consumer proposal. The LIT will then pay the creditors according to the repayment schedule and amount agreed upon in the consumer proposal.

Creditors are usually willing to accept a consumer proposal Edmonton if they believe they will receive more money than in bankruptcy. 

What Are the Advantages of Submission a Consumer Proposal?

Are you thinking about filing for a consumer proposal or bankruptcy but aren't sure which one to choose? Here are three significant advantages of filing a consumer proposal over bankruptcy:

1. Staying out of bankruptcy.

One significant advantage of submitting a consumer proposal is not declaring bankruptcy. A consumer proposal provides you with short-term debt relief and a better long-term opportunity to rebuild your credit score.

2. Increased Cash Flow

Because it may extend the time you have to repay your debts – or it may reduce the amount you must repay – your cash flow will almost always enhance. Interest stops accruing when you're in a consumer proposal, which helps you save on the total amount of interest you'll pay.

3. Maintain Your Assets.

Many people are concerned that they will lose the assets they have worked so hard to acquire if they file for bankruptcy. Unlike bankruptcy, which may require you to surrender the keys to your home and car, a consumer proposal usually protects those assets from being seized by creditors.

Can You Get Out of a Consumer Proposal Early?

Fortunately, if you have the means, you can make additional payments toward your consumer proposal to pay it off sooner. When your proposal is accepted, you will be required to pay our LIT experts a lump sum or a series of payments. It will be critical for you to follow the conditions outlined in the proposal. You may keep your assets once you have completed your payment. If, on the other hand, your proposal is rejected, Debt Free Alberta will assist you in making changes and resubmitting the proposal or will suggest alternative solutions to your financial problem. Faber bankruptcy Edmonton will be your rock throughout the process, ensuring that you have a debt-free and secure future.