Much of the Western industrialized world has gone into an economic tailspin from which we are only beginning to recover. As a consequence, more and more consumers find themselves in dire financial straits and are looking for ways to help manage their debt load.
Credit counselors and filing for Calgary bankruptcy are two of the most common options that people tend to think of when it comes to unmanageable debt. Radio and television commercials are filled with companies offering assistance with filing for bankruptcy. There’s also been a significant increase in commercials that offer the services of a professional credit counselor.
Most people view personal bankruptcy as a last resort and will turn to a qualified credit counselor for help. No one wants to experience the embarrassment of filing for bankruptcy as well as all the future problems that come with having this stigma on your record. Many counselors do not realize that there is a much more effective option for their clients. This option, known as The Consumer Proposal, gets scant publicity and is almost unknown to most people who are struggling with personal debt. Below we will review the important points and options of the Consumer Proposal. We’ll also look at how a counseling service can help consumers implement a Consumer Proposal.
Agencies that offer credit counseling are comprised of ones that are for profit as well as ones that are non-profit. Both types of agencies will charge a fee for their services. You can expect them to formulate a Debt Management Plan that meets with your approval. They will then present the plan to your creditors. This will not include creditors that have secured their loan. These usually include home mortgages and loans on an automobile.
The idea behind the plan is fairly simple. The credit counselor gets your creditors to agree to lower their interest rates and waive late fees you might have acquired in exchange for a managed repayment schedule. Your credit accounts are closed and you will pay a single, much lower, monthly payment directly to the counseling service who in turn pays the creditors.
Some debt may be so large that it will restrict you from qualifying for credit counseling. There are differences that you need to understand when it comes to a Debt Management Plan or a Consumer Proposal. It’s important to know the differences before you call a credit counseling service.
First, a DMP (Debt Management Plan) does not lower your total debt; it just restructures the repayment in a more manageable way for the consumer. If you owe $30,000 in unsecured debt, you will pay all that back over time plus the accumulated fees for the credit counseling service, which varies.
A Consumer Proposal benefits the client by allowing the credit counseling service to negotiate with your creditors for a reduction in the amount you currently owe. The percentage that it can be lowered will differ depending on many factors. If your wages are currently being garnished, then by law this must stop. With a Debt Management Plan lifting a garnishment will be at the sole discretion of your creditors.
A bankruptcy trustee can handle a Consumer Proposal. They must be licensed as this is a legal agreement that is binding in a court of law. The government requires that consumers use their services in order to file a Consumer Proposal. Consumers need to understand that a bankruptcy trustee is experienced in handling many aspects of debt management.
In fact, they are highly trained professional debt advisors who can help you evaluate your current financial situation and walk you through all of the available debt solution options, including both Debt Management Plans and Consumer Proposals. The initial consultation is free so why not do yourself a favor and give one a call. You have nothing to lose but a little time and everything to gain.
