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Consumer proposals are legal agreements between someone in debt and their creditors, administered by Licensed Insolvency Trustees. When someone in debt works with their trustee, they draft an offer in which creditors will get paid over a period of five years.
Consumer proposals are an alternative to declaring bankruptcy with benefits of their own. This article aims to clarify these benefits and, most importantly, if someone filing for a consumer proposal can keep their car.
Holding Possession of Your Car in a Consumer Proposal
In consumer proposals, people in debt have their possessions protected from creditors. This means that if a licensed insolvency trustee has filed and submitted a consumer proposal on your behalf, your assets remain with you.
And that also includes your car – regardless of its value.
How Making Car Payments Work in a Consumer Proposal
In a consumer proposal, you can keep all of your leased or financed cars because the banks and financial institutions do not want your vehicle – they want your monthly payments.
They want only the car payments you own, and if you do not own any money on your car, you must disclose your vehicle’s value only in your list of assets. In Ontario, cars are exempt up to a value of $7,117.
Leasing or Financing a Car in a Consumer Proposal
When you file for a consumer proposal, you can still lease a car or get a car loan. If you are getting a loan for a vehicle, you must contact your trustee so they can reassure finance companies that you are a responsible payer.
If you decide to lease a vehicle, you must inform your trustee of any lease terms and monthly payments you need to make. To cancel any lease or finance agreements existing at the time of filing the proposal, you must do so as a part of your proposal, and any amount you owe, after the sale of the vehicle by the secured creditor, will be labeled an unsecured debt.
Sometimes, it is easier to continue making car payments when you file for a consumer proposal to pay off debt. Consumer proposals offer creditors monthly debt payments through settlements, not by surrendering assets – one of the reasons why filing for a consumer proposal is more appealing than declaring bankruptcy.
Additional Benefits of Consumer Proposals
Another benefit of filing for a consumer proposal is that it does not hurt your credit report compared to a Bankruptcy. It also helps you recover from overwhelming debt much faster.
With consumer proposals, you have legal protection from creditors, thanks to the assistance of your licensed insolvency trustee. You can also pay any debt much faster, with no interest fees.
How Do Consumer Proposals Work?
In consumer proposals, your debt is combined in one settlement to be paid over a period of time up to five years. A licensed insolvency trustee will evaluate your situation and your options before filing a consumer proposal for you.
When To Submit a Consumer Proposal
Filing for a consumer proposal is a good idea for anyone with difficulty paying for their extensive debt or a damaged credit score.
When someone has a considerable amount of debt to pay, creditors may call non-stop with demands or even request to get a hold of the debtor’s paychecks. Consequently, other payments get delayed – which gives people trouble keeping up with their financial obligations.
If a person in debt struggles to organize their payments, filing for a Consumer Proposal offers the efficiency and practicality of combining many different payments into one.
How Remolino & Associates Can Help You
At Remolino & Associates, we care about you and your business. We are licensed insolvency and bankruptcy trustees committed to assisting you in your debt-free journey.
We have helped thousands of residents across Ontario get out of debt. If you need help, call 416-792-5599. We are here for you.