The Disadvantages of Customer Proposals
byon 07-04-2012 at 04:49 PM (217 Views)
"If you are 1 of the millions of Canadians drowning in debt, you are probably searching for the very best debt help options available. A well-liked option to bankruptcy in Canada is the consumer proposal. If you are unfamiliar with the customer proposal, it is a negotiated settlement amongst you and your creditors to lower your unsecured debts.
To file a consumer proposal you should very first hire a licensed trustee, who will review your debts and your monthly budget, and determine a monthly payment plan that best fits your monetary demands. You will submit your lower lump sum payment to the trustee, who will then distribute the cash to your creditors.
A single huge benefit of customer proposals is that most of your debts will be discharged. Particular legal debts like child help payments and court fines will not be included in your proposal. Plus, you no longer spend interest on your credit cards and will most most likely know specifically how much you’ll be paying each and every month.
One particular disadvantage of consumer proposals is that you must stick to your payment plan 100%, even if an unexpected financial hardship comes about. You cannot defer on any much more than two payments. Once you defer on three, your proposal will be annulled. Therefore, do not sign up for a consumer proposal unless you know for sure you’ll be able to make the monthly payments.
Another large disadvantage is that a customer proposal will stay on your credit for three years right after you’ve completed producing your payments. In other words, if your payment plan lasts four years, your credit will be negatively affected for a total of seven years. That’s almost as negative as bankruptcy! During this whole time period, you almost certainly will not be in a position to get a good deal on a mortgage or auto loan, and you won’t be able to get a credit card that isn’t secured.
Lastly, your trustee is entitled to a monthly percentage of about 20%, based on your proposal. If your debts are lowered by 50%, you will nonetheless be paying 70% of what you owe per month.
Debt settlement is a much a lot more helpful alternative to get rid of your debt. Just like with consumer proposals, your monthly debts will be lowered, but your credit rating will not take as a lot of a hit and the charges you spend to a debt settlement service are lower than those you’d spend to a trustee. debt negotiation company"