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How a consumer proposal provides debt relief

Explore how a government debt relief program like a consumer proposal can help you get out of debt
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If COVID-19 has taught us anything it has confirmed just how many people are living paycheque to paycheque and using debt to survive.

Those struggling with financial hardship due to debt carry an overwhelming burden. Debt limits your flexibility in a crisis. When debt payments take up a significant portion of your paycheque, you are not able to save for an emergency. More debt is not the answer.

It is possible to get your life back on track and the process begins with a frank discussion about your situation with a debt professional like a Licensed Insolvency Trustee.

A Licensed Insolvency Trustee is licensed and regulated by the federal government, and understands the nuances of all available debt relief options, whether bankruptcy, debt consolidation, consumer proposals, or credit counselling. They will work with you to develop a personalized debt repayment plan, helping you make an informed decision about how to get rid of overwhelming debt.

One, often misunderstood option, only available through a Licensed Insolvency Trustee, is a consumer proposal.

An alternative to bankruptcy

Many fear they may have to file for bankruptcy, but this can be avoided by filing a consumer proposal instead. A consumer proposal is a legal debt relief solution. Legislated by the federal government, it allows you to consolidate and settle your debt for less than you owe. You repay your creditors a percentage of what is owed in exchange for full debt forgiveness. It is not uncommon to be able to write off as much as 70% of your debts.

A consumer proposal can eliminate almost all unsecured debts, including credit card debts, bank loans, payday loans, tax debts and certain student loan debts. Payments can be spread out over a maximum of five years.

Other benefits of consumer proposals

To start, a proposal does not affect the mortgage on your principal residence or a secured car loan. You are allowed to keep your assets, including your tax refund. 

A consumer proposal is legally binding agreement, and the only debt settlement program sanctioned by the Canadian government. It can even help you deal with what are often viewed as more worrisome creditors like the Canada Revenue Agency and payday loan companies. Since it is a legal process, a proposal puts a stop to collection calls, a wage garnishment, and any legal action undertaken by your creditors to collect.

Clients are drawn to consumer proposals because it is a safe and reliable way to get out of debt; it is can also be the cheapest. That’s because it reduces your monthly payment to an amount that is affordable for you and the full repayment period is interest-free. 

Another big benefit of the consumer proposal option is that you pay exactly the amount you negotiated with your creditors at the beginning of the process and not a penny more. There are no upfront or additional fees to worry about. Once you’ve met all the terms of your proposal and all of the payments have been made, your debts are eliminated.

Ted Michalos is a Licensed Insolvency Trustee and a Consumer Proposal Administrator in Guelph. He strongly believes debt management advice should be honest and straightforward. “What you need is some friendly advice, but more importantly some professional knowledge to point you in the right direction. You need someone, like a LIT, who is trained and certified to understand all debt relief options and will work with you to determine what makes sense for your specific situation.”

In order to file a consumer proposal, you must work with a Licensed Insolvency Trustee. Hoyes, Michalos & Associates Inc. has a 99 per cent success rate for the proposals they file. Douglas Hoyes and Ted Michalos are co-founders of the firm, which specializes in providing debt relief solutions. They’ve helped over 60,000 Ontario residents get out of debt since 1999. 

As trustees, they help those struggling with debt explore their options. They conduct a full debt assessment, review your income and debts, learn about your specific financial situation and help you find the best solution. Anyone with debt problems who lives in Guelph will work personally with co-founder Ted Michalos. 

Hoyes, Michalos & Associates Inc. has offices in Guelph and across the province and can conduct both assessments by phone and video conferencing. Get a quick, confidential opinion or book a free, no obligation phone consultation