What you should know about Consumer Proposals
If you are having difficulties making your monthly payments, falling behind or getting over-whelmed by your debts; you are not alone. Just like you, thousands of individuals throughout the Maritimes have sought the protection and help of a consumer proposal.
Most individuals experiencing financial problems want to pay their debts, however, many are simply unable without additional help! A Consumer proposal is a tool to provide the additional help needed to take control of debt problems.
The professionals at Allan Marshall & Associates Inc. know the difference between being unable to pay your debts and unwilling to pay your debts and consumer proposals offer individuals the ability to negotiate their debts into one easy monthly payment. Please read through the information on this site, and contact Allan Marshall & Associates in New Brunswick to assist you through the steps of a consumer proposal.
Lump sum Payments
A lump sum offer is often used when an individual has a third party who is willing to offer some of their resources to help settle an individual’s debts.
(For example: A third party is willing to fund $10,000.00 into the proposal to be divided amongst the unsecured creditors, pending creditor acceptance. No funds are paid by the 3rd party unless creditor acceptance results in a legally binding agreement.)
Fixed Monthly Payments
Fixed monthly payments are the most common type of consumer proposal. An offer to pay a set dollar amount every month for a fixed number of months. For example: A monthly payment of $350.00 for 60 months
Stepped payment are often used when an individual’s circumstances are going to change over time.
Example 1. $250.00 for the first 12 months and then $350.00 for the next 24 months and then $400.00 for an additional 24 months.
Example 2. $1,000.00 per month for Nov, Dec, Jan, Feb $ 150.00 per month for Mar, April, May, June, July, Aug, Sept, Oct and this payment will continue for a period of 4 years
Floating Payments are payments that can vary in amount based on a set of criteria. These payments will often have a set minimum payment that can be adjusted based on a future set of circumstances
For Example: Debtor agrees to contribute either half of any monthly income earned above $3,000.00 OR a minimum of $500.00 per month for a period of 60 months. Whichever of the proceeding amounts be the greater. Monthly earnings will be verified by pay stubs.
Full payment is used when an individual can afford to pay creditors but needs help dealing with interest and penalties
Example 1. Debtor agrees to pay a fixed amount each month until the principal is paid in full. All future interest, penalties and collection actions are stopped as long as the agreed upon monthly payment is being made.
Percent payment is where an individual agrees to pay a fixed monthly payment until a specified amount of the debt has been paid into the proposal.
For Example: The debtor agrees to pay $400.00 per month until 37% of the proven debts have been paid. The actual amount to be repaid will be determined once creditors have filed their claims and supporting account details.
Sale of Assets
A Sale of assets is often done in a proposal to liquidate an asset where you need more time or to prevent collection activities from reducing the value on an asset (forced sale) or as an incentive for creditors to accept the proposal.
Example 1. The debtor agrees to sell the summer cottage in the spring and instruct the lawyer to pay the net proceeds from the sale of the asset into the consumer proposal for the benefit of creditors. (This allows the debtor to wait until the property is more marketable, in the spring and summer, rather than being forced to list the asset in the off season and taking a forced sale amount).
Example 2. The individual agrees to sell or cash an asset that would not normally be available to creditors. The individual might offer to cash their protected RRSPs, pay the taxes on the proceeds, and remit the remaining balance to the creditors in exchange for the creditors releasing them for any remaining debts. The cashing of the RRSPs would be conditional upon the creditors accepting the Consumer Proposal. The decision whether to cash RRSP’s intended for retirement is not a decision to be taken lightly and the pros and cons of such as decision would be discussed during your free consultation.