The way it works is that your trustee sends out a "proposal" to your creditors asking that they accept payment of less than the full amount of your debt.
Creditors holding the majority of your debts must agree to the proposal for it to work, and not all debts are eligible to be included.
You will know up front that you have their agreement.
This lowers the risk that you may assume if you sign a contract with a debt settlement company for debt settlement or debt consolidation services if they are ultimately unsuccessful or just refer you to a Licensed Insolvency Trustee whom you can see for free.
A debt management program, offered through a credit counselling agency, allows you to consolidate certain debts, like credit card debt.
You make one consolidated credit payment, like any other debt consolidation program, however, your credit counsellor may be able to negotiate an interest free period or interest rate reduction.
If you don’t qualify for a debt consolidation loan, or cannot afford to repay your debts in full, talk to us about a consumer proposal.
Filing for a Consumer Proposal is a legal process, done through a bankruptcy trustee.
You are consolidating your many debts into one, by refinancing with a new loan to pay off several old debts.
In Canada there are We explain the advantages, disadvantages and risks of each of these options below.
A consumer proposal is often the safest, lowest cost debt consolidation option if you are dealing with more than ,000 in debts and are struggling to keep up with your monthly payments.
They are not offering you a new debt consolidation loan.
Instead, what they are offering is to combine selected debts (usually just credit card debt) into a single payment with their agency.