Example of a consumer proposal
Mary lost her job a few months ago due to company restructuring. She had no ‘emergency savings’ so, while she looked for work, she used her credit cards to make ends meet. Mary just found a temporary part-time job, but she still owes $25,000 on her credit card. She is finding it hard to get by on her new lower salary. Mary checked out her debt solutions options by talking to credit counsellors, a debt consolidation loan company and a trustee. She decided that filing a proposal would give her the relief she needed to get back on track.
Here are the details of her consumer proposal:
Mary negotiated to pay back 30 percent of the money she owed with no added interest; therefore, the portion of debt she committed to repay is $7,500
She arranged to pay off the debt over five years (60 months)
Her consolidated monthly payment is $125, which she will pay to her trustee each month
If Mary had decided on another debt solution, her monthly payments may have resembled the following for the same five-year period:
Monthly payment |
$125.00 |
$458.88 |
$734.67 |
$994.34 |
|---|
| Terms |
Pay back 30% of original amount owed |
Pay back debt in full with no interest, plus a 'fair share fee' equal to 10% of debt |
Pay debt in full at 12% interest, compounded annually |
Pay back debt in full, 19% interest, compounded annually |
|---|
Repayment period |
5 years |
5 years |
5 years |
5 years |
|---|
If you are interested in finding out more about how a consumer proposal might work for you, contact a
BDO trustee.