Do I Lose My Assets With a Consumer Proposal?
You may consider filing a consumer proposal if you struggle to keep up with your debt payments instead of turning to bankruptcy companies. But you may wonder if a consumer proposal means you'll lose your assets - which is what this article aims to answer. Read on to find out how a consumer proposal works and what to do if you want to keep your assets through this debt relief process.
What Is A Consumer Proposal?
Simply put, a consumer proposal is an effective way to deal with unmanageable debt. It is a good option if you can't afford to pay off your debts and don't qualify for protection under bankruptcy companies. A consumer proposal is a written agreement to settle the balances of all or some debts under a court-approved arrangement. It's where you keep your property and make monthly payments until the balance has been paid in full.
A personal loan helps address temporary financial needs without much work involved in the process. It is often available even when someone has bad credit or no credit at all, though there are many steps involved in borrowing money which are covered in more detail as we go through them one by one.
Will You Have to Give Up All Your Assets?
The short answer is no. There are some exceptions to this. Such as if you are bankrupt, have an employment insurance claim, or have any debt owing from the previous three years in addition to your current proposal; all of these could lead to your assets being seized by the court.
Otherwise, most likely not - if you're getting a consumer proposal and intend on keeping your house and other personal property, you don't need to worry about anything. However, if you may be selling off any personal property to pay back your debts over time, there may be concerns about whether or not the creditor will be given their share at the time of sale.
Are There Non-Bankruptcy Options Available to You?
Consider a consumer proposal if you're feeling overwhelmed with your debt and looking for alternatives to bankruptcy companies. Although not as popular as it used to be, this legal process is an option for those who would prefer to avoid the stigma of bankruptcy. To file for a consumer proposal, you'll first have to reach out to the creditors that are owed money by asking them if they're willing or able to help offer solutions outside of bankruptcy.
Once you've obtained their permission, you can either pay back what's owed in monthly installments or transfer some of your assets to create long-term repayment plans for them. It can involve giving up things like your car, boat, or house in exchange for an agreed-upon sum.
Pros & Cons of the Various Options Available to You
It's a question everyone asks. Let's take a closer look at how you can avoid losing your assets in bankruptcy. In places like Canada, there are two main options for debt repayment: personal bankruptcy companies and consumer proposals. Personal bankruptcy is for those with debts over $250,000 with little equity to protect. If one does not want to lose assets (in most cases, this would be their home), one must file for personal bankruptcy.
On the other hand, a consumer proposal gives consumers more flexibility when deciding what property needs protection and what doesn't. It could even mean sacrificing their car, which likely has greater equity than the house or business property sacrificed in personal bankruptcy.
Finally, a consumer proposal is an agreement between you and your creditors to settle the debts for less than the full balance owed. To become a debtor under this, you need to be insolvent - or unable to pay back your debts as they become due. Fortunately, assets you have transferred after submitting a proposal are not considered part of the proposal. That means if you decide to sell your house or use up all of your savings to fund the repayments on your debt, these items will still belong to you. It's good news if that is your circumstance, but you should talk to a professional debt counsellor to help iron out the best solutions.