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Toronto is the largest city in Canada and its residents are among the highest income earners in the country. Toronto is also considered the financial, technological, cultural, and sports hub of the country. However, despite all of that going for them, those in Toronto are racking up debt faster than almost anyone else in the country.
Want to learn about debt consolidation in Toronto? Take a look at this.
While many in Toronto make enough or have enough saved to handle this increasing debt load, others will struggle and require some assistance. Canada is home to several forms of debt relief assistance, with one of the most common options being a consumer proposal.
A consumer proposal is a legal process in which you and your creditors will agree that you will pay back a part of what you owe, but not all of it. The amount you pay back will depend on a number of things such as how much you owe, your income, and the types of things that you own.
When a price is agreed, you will have a set amount of time (normally 5 years) to make predetermined payments to your insolvency trustee in Toronto, who will then send the payments to the creditors. It is often seen as a less-intense and harmful method of debt relief than bankruptcy, but more serious than other common options such as debt settlement or credit counselling.
In order to set up a consumer proposal in Toronto or anywhere else, there is a process that you must go through to ensure everything is done right and by the book.
The first step to the consumer proposal process is to find and meet with a licensed insolvency trustee in Toronto, who will be in charge of facilitating the agreement and helping you out along the way.
Next, the two of you will create a customized proposal to send to your creditors based on how much you owe them, your income, and your overall financial health. Once created, the proposal will be sent to your creditors by your insolvency trustee and you will await a response.
The creditor that holds the majority of your debt will need to sign off on it in order for it to become official. Once the main creditor has accepted the proposal you will have 5 years to make regular and scheduled payments to your creditors.
Wondering if your creditors will accept your consumer proposal? Find out here.
Once done, you will be free from your debt and will be able to start rebuilding your credit in Toronto. Now, a consumer proposal won’t do as much damage to your credit as a bankruptcy will, and your assets are safe, but you will likely still be left with a pretty bad credit report and score once the process is complete.
Before you go visit a licensed insolvency trustee and set up a consumer proposal in Toronto, you need to be aware that not all types of debt can actually be included within a consumer proposal. Two of the most common types of debt that cannot be included in a consumer proposal are:
Therefore, it’s important to keep in mind that a consumer proposal may not be the best option for you if the majority of your active debt is either student loan debt or secured debt.
This is what happens to your debt when you file for a consumer proposal.
If you’re financially struggling in Toronto and you are interested in a consumer proposal or learning more about them, don’t hesitate to reach out to Loans Canada.
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