Canadian citizens who find themselves in a financial crisis have the option of filing a consumer proposal rather than bankruptcy. Citizens of the United States have related option called a Chapter 13 Wage Earner Plan. When this is the option chosen, it is a legally binding agreement between the creditors and the debtor.

During tough economical times, more people find themselves in a situation where they have more debt than they can repay. A proposal of this type allows the person to get out of debt while satisfying his or her creditors. A bankruptcy trustee will lead the process of drawing entering into this type of plan and file it with the court.

There is another option that some people may choose which is referred to as credit counseling. Credit counseling and a proposal are alike in many ways. Both were created to help people who find themselves in troubling financial situations. No matter what choose is made once a plan has been formulated the consumer begins making payments to pay down the debt owed. As soon as all of the payments have been made, the person is out of debt. It does not matter which plan is used both are reflected on the credit report for three years.

There are a couple of things to keep in mind when making the decision as to which plan is right for you. Most credit-counseling plans expect you to repay all of your debt whereas a proposal will allow you to bargain with your creditors how much of the debt will be repaid. Credit counseling is not a legally binding agreement and you or the creditors can default on the agreement without any consequences where as a proposal is filed with the courts and is legally binding for both parties.

Filing bankruptcy should always be the last option. The benefits to filing a proposal are intended to prevent the filing of bankruptcy. Several things help the consumer in this situation. First, it sets a maximum repayment period of five years. Second interest rates are frozen immediately and you no longer are paying interest on unsecured debt. If at least 50% of your creditors agree to the plan, everyone is required to accept it. When an agreement is reached, the debtor may not have to repay all of the debt. Wage garnishments that have been occurring are immediately stopped.

The procedure necessary to file this type of agreement begins with meeting with a bankruptcy trustee. This advisor will evaluate your finical situation and determine how much money you can be expected to pay out monthly. He will then look at your unsecured debt and make a plan to pay it back. Once an agreement has been made and you have approved it, the plan will be sent to your creditors for their approval.

Creditors have 45 days to evaluate the proposal and decide if the terms are acceptable to them. Once 50% of the creditors accept the plan all must accept it. It is then filed with the court and in 15 days, an order is made which is legally binding from that day forward for you and the creditors.

However, if more than 50% do not accept the plan or if 25% or more want a meeting then you must meet with the creditors and the trustee. At the meeting, you and the creditors will negotiate a new plan, which is agreeable to both of you. The advisor will be there to negotiate the terms of this new agreement.

At some point in time, many people find themselves in tough financial situations. When this happens, there are options out there. Meet with someone to discuss your possibilities. You may find a consumer proposal is an option you and your creditors can live with.

Considering Ottawa bankruptcy? Reclaim your financial future with the guidance of Doyle Salewski Inc. – Ottawa Credit Counsellors and Trustee In Bankruptcy 396 Bank Street, Ottawa, ON K2P 1Y5 (613) 237-5555.

Considering Ottawa bankruptcy? Reclaim your financial future with the guidance of Doyle Salewski Inc. – Ottawa Credit Counsellors and Trustee In Bankruptcy 396 Bank Street, Ottawa, ON K2P 1Y5 (613) 237-5555.
http://www.doylesalewski.ca/personal/en/bankruptcy/

Author Bio: Considering Ottawa bankruptcy? Reclaim your financial future with the guidance of Doyle Salewski Inc. – Ottawa Credit Counsellors and Trustee In Bankruptcy 396 Bank Street, Ottawa, ON K2P 1Y5 (613) 237-5555.

Category: Finances
Keywords: bankruptcy,debt,credit,counselling,money,finance,family,personal,management,life,home,shopping