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Consumer Proposal (Chapter 13 in the US) Strategy


What is Consumer Proposal?

A Consumer Proposal (Canadian) or Wage Earner Plan/Chapter 13 (USA) is a legal process that is filed and administered by a licensed trustee in bankruptcy or bankruptcy lawyer. It enables the debtors to restructure their financial affairs. This option creates an opportunity for the debtor to make reasonable, interest-free payments to creditors’ for up to five years. The debtor can retain all their assets and avoid bankruptcy.

Let’s explore the advantages and disadvantages of Consumer Proposal or Wage Earner Plan strategy.

Advantages of a Consumer Proposal or Wage Earner Plan

A consumer proposal or Wage Earner Plan is an ideal choice for persons employed within the financial industry. These individuals are better served by filing a consumer proposal and are urged not to file for bankruptcy. A proposal to creditors is not the same as filing for bankruptcy, even though they are governed by theproposal

Bankruptcy Act in many jurisdictions.

The debtor is required to attend two mandatory counseling sessions about budgeting, money management, and credit education.

This is an advantage that not only helps you figure out what went wrong, but it will also help you find new ways to budget, pay bills, and spend money. These counseling sessions lessen the occurrence of the same financial situation in the future.

Disadvantages of a Consumer Proposal or Wage Earner Plan

A consumer proposal or wage earner plan will have a negative impact on your credit score. Also, your client credit report will show that a proposal has been filed, and stays on their credit bureau for six or more years. Your client credit score will drop to an R9 status (Account is flagged as bad debt, placed for collection, or account is in bankruptcy) for the duration of the proposal (three to five years). It will then change to an R7 (Account is consumer proposal or credit counseling).

How to succeed your Consumer Proposal?

Leveraging Consumer Proposal as a strategy to deal with your client’s debt doesn’t solve the problems that create the delinquency in the first place. You can plan your client succeed with its proposal and help them through the recovery process. Using the Money Coaching Software Platform, you can personalize a plan to help your client cope with the proposal and smooth their plantransition gradually to putting financial house in order. You can help your client:

  • Get to know their current financial reality
  • Determine their Net Worth and put strategies to improve their net worth gradually
  • Define their life goals and priorities
  • Find the cash they never know they have
  • Implement a spending plan/budget, fund their life goals and costs of living
  • Track actual expenses and measure against estimated expenses to bring further balance to their cash flow
  • Commit the savings to funding their Save-Me-From-Debt and 911 funds.

Make sure they honor their consumer proposal terms and conditions so, they can successfully complete the proposal.

Did you know the Money Coach Software Platform enables you to implement consumer proposal plan?

Click to explore how this Debt Consolidation Software works.






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