Consumer Proposal – Pros and Cons

Pros and Cons

Like most things, consumer proposals have both advantages and disadvantages.  The main advantage is that they consolidate and erase your debt, while the biggest disadvantage is that they damage your credit.

In order to provide you with a balanced view of a Consumer Proposal we’ve provided a short list of pros and cons below.

  The good:
  • Pay less than you owe – up to 70% less;
  • Stop interest from accruing;
  • Stop wage garnishments immediately;
  • Stop creditor calls immediately;
  • Repayment can be stretched over as many as 60 months to lower your monthly interest free payment;
  • Debtors keep their car, tools, and other personal belongings;
  • All debts are erased, including tax debt, with a few exceptions;
  • Your payment schedule is fixed regardless of what you earn. Surplus Income is not calculated in a Consumer Proposal;
  • A Consumer Proposal does not prevent you from sponsoring family and friends wishing to immigrate to Canada or affect your memberships and licenses, a key consideration for realtors, accountants, and lawyers among others;
  • Two counselling sessions are included in our fee; and
  • Results in a better credit rating than bankruptcy
  The not so good:
  • Not all debts are erased;
  • Debtors obtain an R7 credit rating for 3 years after their last payment;
  • Money is required to fund the proposal.  A paycheque or other source of funds is required;
  • Creditors must approve your proposal; and
  • The proposal can fail if 3 payments are missed

A Consumer Proposal is worth considering if you:

  • Can’t repay your debt on your own, but
  • Have the means to afford a partial repayment of your debt.
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