NWT Consumer Proposal
As of the beginning of 2013, the current recession appears to be finally ending. This is great news for all Canadians even though the recession never hit Canada as powerfully as it did the United States. With the recession ending, people are opening up once more to installment loans for large purchases, car loans, and revolving lines of credit such as credit cards. Since economic growth seems to be on the horizon again, many Canadians are confident that they will be able to take out new debt and afford the payments on it.
Thus far, the evidence suggests that most Canadians are keeping up with their consumer debt. Delinquency rates have dropped, which means that the number of people who have not made all their minimum debt payments for three months or longer has decreased. For example, the delinquency rate for installment loans is just over 1 percent, and installment loans have the highest rate of delinquencies for all consumer debts in Canada.
On the other hand, there is some cause for concern. In 2012, the average Canadian’s consumer debt jumped nearly 6 percent. If this continues over time, residents may find themselves in over their heads when it comes to their debt. Moreover, some may already find themselves buried under a mountain of debt that they will not be able to pay off through ordinary means. Extraordinary difficulties call for extraordinary measures, which is why so many are choosing to submit a consumer proposal in the Northwest Territories.
Explaining the Northwest Territories Consumer Proposal
The last debt solution that can be attempted in Canada before filing for bankruptcy is known as a consumer proposal. Northwest Territories residents who go the consumer proposal route enter into a legal agreement with their creditors to pay off their debt. This is done via a licensed bankruptcy trustee, who helps the consumer put together a proposal and then submits it to one’s creditors. If the creditors accept it, payment is made either in installments or in one lump sum to eliminate the debt.
Why does a consumer proposal in the Northwest Territories help people who otherwise could not pay off their debt? The answer is that in putting together the consumer proposal, the bankruptcy trustee negotiates with creditors to settle debts for less than what is actually owed and in most cases your interest stops accumulating on the remaining debt. Thus, the consumer pays much less to settle his or her debt than he or she would without a consumer proposal. Only Canadians who owe less than $250,000 ($500,000 for married couples filing a joint consumer proposal) qualify for this debt solution.
Northwest Territories Consumer Proposal Pros and Cons
The consumer proposal offers several advantages:
• Your assets are secured and cannot be seized by creditors.
• All of your creditors must agree to the proposal if creditors representing at least 51 percent of your debt agree to it.
• Debt collectors must stop calling you.
At the same time, a consumer proposal has key disadvantages:
• It has the same negative impact on your credit as a bankruptcy, effectively limiting you from new credit for up to seven years.
• If creditors holding 51 percent of your debt decline the consumer proposal, it does not go through, which means you may not get the favorable settlement totals offered by the creditors who did agree to the proposal.
Find Out More
Not everyone will benefit from a consumer proposal. Northwest Territories residents who would like to know more about this option or who believe there is a better option for them should fill out the debt relief application form for more information.
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