Advantages of Applying For a Reduction Plan for Debt

Applying for a reduction plan for your debt is very advantageous – the most important of the advantages is that it is a step – a big step to having control over your life once again!

Get a mastery over your financial situation: With a debt reduction plan, you relief yourself of an unfathomable debt, then you will get back in control over your life and financial status.

Bargain to pay back only a portion of your debt: You could bargain with your creditors to pay back a percentage of what you owe, depending on how mush. For instance, you could bargain to pay back 30% of your debt supposing you owe $50,000 (meaning all you have to pay back is $35,000).

Merge debt into an adaptable monthly payment: With a debt reduction plan, your debt as contained in the signed contract (proposal) is merged into a workable monthly payment, which will be paid to your representative. You could make a bigger payment though, if your circumstances allow it.

Suspend interests starting from the file date: When you make sign a contract, all charges on your credit cards, and tax liabilities are suspended – implying you won’t have to accumulate any further interests.

Do not let your creditors file a lawsuit against you: With debt reduction plan, you do not have to put up with aggressive phone calls received from collection organizations; your creditors no longer have the right to get in touch with you or take further actions.

Guard your belongings (home, cars, RESPs, RRSPs, etc.): If you have money save in RRSPs and RESPs; you have a car and a home, a debit reduction plan will see to it that these possessions are not taken away from you!

Prolong repayment period: Since it is allowed for a payment proposal to span across five (5) years, it is advisable that you extend your payment period so that you can better manage it (i.e. your payment).

Do not pay any extra fees aside your monthly payment: You should only pay either your lump sum or installment payments – do not add any extra charges.

Avoid liquidation: Debt reduction plan will protect you from liquidation.

Note: Have a discussion with a federal registered counsellor to know if you can enjoy the benefit of making a proposal to your creditors.


Unsecured Debt Should Be Included In a Consumer Deal

When you are preparing a consumer deal for your creditors, some principles must be followed as to the debts to be included. Basically, a consumer deal should be made available to unsecured creditors. All of your unsecured debts should be listed. Some of these include:

  • Credit cards
  • Payday loans
  • Lines of credit
  • Income taxes
  • Personal loans

A Consumer Deal and Secured Debts

It is impossible to modify a secured debt using a consumer deal (proposal). A secured debt as the phrase implies, means that the debt has an asset backing: such as your car (should you obtain a vehicle loan), or your house (in case of a mortgage). If payment is not made on a secured debt, legally, the creditors have the right to acquire the asset agreed upon (creditors may even sell off the asset to recover their money). As long as the consumer proposal makes it clear, any loss on the agreed asset is an unsecured debt, which should be included in your consumer deal.

Assuming your secured debt, e.g., mortgage or car loan is in good standing, it will not be possible for creditors to demand that you surrender your asset, because a consumer deal has been filed. If there are other faults, the creditors may be able to terminate the deal. If a deal is terminated, the loss may be included in the proposal.