Bankruptcy basically means the legal process in which a person or firm declares inability to pay debts. Any available assets are liquidated and the proceeds are distributed to creditors. A person or firm may be declared bankrupt according to one of several chapters of the federal bankruptcy code. A person’s assets can be turned over to a trustee and this will be used for payment of the remaining debts. On the other hand, there is another option you can sign up for which is called consumer proposal in which your assets are legally protected and your creditors cannot seize your assets during the contract period.
In the past, filing for bankruptcy had a stigma attached to it, so many people wanted to avoid it by any other alternative means possible, even desperate ones. During that time, the main way to get out of debt was to file for bankruptcy.
After a while, financial companies started using bankruptcy filing as a kind of financial planning. Every decade or so, or when they get themselves stuck in a bad contract deal, it was a clever idea to file for bankruptcy and alter the company’s financial goals. Until a few years ago, the common public felt that filing for bankruptcy was a form of failure and a cause for embarrassment and they used to do everything they could to avoid it. Nowadays we can see many Fortune 500 companies which file for bankruptcy, so if those big companies can file for bankruptcy, there is no embarrassment or difficulty for the common man to file for bankruptcy.
A common rumor running about that time was that if anyone files for bankruptcy, then no bank will ever give credit again, which means they will never be able to have a credit card again and for most, that is a very scary thought indeed. Many companies file for bankruptcy for similar reasons that public customers do, but they have more information about the banking system and they do it with the main intention of cutting their losses and finding ways to improve their financial position that would make them financially stronger in the future. As a consumer, you should do some research about banking policies and you need to have the same attitude as these companies and make the same kind of plans.
Many people may not like the idea of selling their valuable assets to their creditors for debt settlement, and for these kinds of people, they can always have the option of what is called Consumer Proposal. Some of the advantages of this option if you have filed for bankruptcy, are firstly you can keep all of your valuable assets, you will also be fully protected by the law and thirdly, it is less costly than credit counseling solutions for asset protection.
If you don’t opt for consumer proposal, and you have a lot of assets like vacation homes, boats, RVs or expensive cars, they will be seized and the money after selling these items will be paid back to your creditors.
So if you want to protect your valuable assets but have filed for bankruptcy, signing up for the consumer proposal option is the best decision you can make if you still have a regular income which is good enough to pay back some, but not all of the unsecured debts that you owe.
To see if your income is high enough for you to pay back all your debts, it is advisable to hire the services of a licensed bankruptcy trustee who will calculate whether you have enough regular income to qualify for consumer proposal. An assessment of your financial position will be done and a monthly payment plan will be made. You will also be protected by law that during this contract period you have signed for consumer proposal, none of your assets can be seized.
The Benefits of Opting For Consumer Proposal