How much can you save with a consumer proposal?

_{consumer proposal, debt management, Quebec}

A consumer proposal can be a smart move for debt relief, allowing you to settle for less—up to 70% less on unsecured debts if creditors agree. Once approved, interest stops, saving you more over the proposal’s up to five-year span. It’s a structured path to financial recovery.

_{Consumer proposal: a smart solution for debt management.}

Question

How much does a consumer proposal save you? I’m really curious about how much money I could potentially save by going through with a consumer proposal. I’m hoping to get a better understanding of the real benefits. Anyone have insights on the savings?

From: Anonymous Question, Quebec (QC)

Debt Insiders Answer

In Canada, a consumer proposal can be a game-changer for tackling debt, offering the chance to settle for a lot less than you owe. You might see reductions ranging from 30% to 70% on unsecured debts, depending on how much you owe and whether your creditors say yes to your plan. Once your proposal gets the green light, you can breathe easier knowing you’re no longer on the hook for interest payments, boosting your savings further over the duration of the proposal. Generally spanning up to five years, a consumer proposal is a more manageable and structured way to regain financial stability, especially compared to bankruptcy, where you might have to part with your assets to pay off creditors.

From: Anonymous Question

Office of the Superintendent of Bankrupty (OSB) Answer

A consumer proposal can significantly reduce the amount you owe. Typically, it allows you to pay back only a percentage of your unsecured debts over a period of time, usually up to five years. The savings depend on your total debt, income, and the proposal accepted by your creditors.

For example, if you have $20,000 in unsecured debt, a consumer proposal may offer you the option to settle for 30% of that debt, resulting in payments of about $6,000 instead of the full $20,000. The exact savings will vary based on your specific circumstances and the terms negotiated.

To obtain precise figures and understand your potential savings, consult the Bankruptcy and Insolvency Act, specifically provisions surrounding consumer proposals (Sections 50.6-50.7).

From: This answer is provided by scanning the OSB Bankruptcy & Insolvency Act and related directives

Related Questions

Here are the top 5 most frequently asked questions related to the savings and implications of a consumer proposal, based on the provided sources and general trends in consumer inquiries:

1. How much of my debt can be reduced through a consumer proposal?

A consumer proposal can reduce your debt by often 70% or more, depending on the agreement with your creditors.

2. Will I have to pay interest on my debt in a consumer proposal?

No, the payments you make on a consumer proposal are completely interest-free.

3. How much does it cost to file a consumer proposal?

The total cost includes a Filing Fee ($105), Financial Counselling Fees ($170), and Administration fees that can run upwards of $1500.

4. Can I include all types of debts in a consumer proposal?

You can include unsecured debts such as credit cards, personal loans, and income tax, but not secured debts like mortgages or car loans.

5. How long does a consumer proposal last and how does it affect my monthly payments?

A consumer proposal can last up to five years, allowing you to stretch your payments over this period to make them more affordable.

References

_{Table of article references}