How a Consumer Proposal Calculator Works to Generate Payout

You can always use a consumer proposal calculator if you want to know how much you have to pay through your proposal. The calculator works straightforwardly and will compute your total proposed payout depending on the data you feed it.

The first thing to do is input the financial data from your expected payout and the requirements of the creditors. Then you must divide the amount by the months stated in your proposal. The length of your payment depends on your financial capacity and if there is an agreement with the creditor.

It’s more preferable to file a consumer proposal compared to bankruptcy. It’s because, through consumer proposals, you can still pay back your creditors without losing your precious assets. You won’t have to worry about not understanding consumer proposals since a Licensed Insolvency trustee can help you.

Understanding Consumer Proposals

How do you file consumer proposals in the first place? Before using the consumer proposal calculator, you should understand the goal of your proposition. Generally, consumer proposals settle your debt for 30-40%.

Every person has their own circumstances when it comes to their debts. That’s why you can’t always expect the general percentage. It is still subject to change depending on each person’s financial capabilities.

Some factors you have to consider when calculating how much to pay in your consumer proposal are assets, income, and even other debts. You can also talk with a Licensed Insolvency Trustee if you have questions or need clarification about the process.

Steps in Calculating Consumer Proposal Payment

You should know how the process works if you’ve decided to use a consumer proposal calculator to pay back your debt rather than declare bankruptcy. Below are some steps to remember when calculating the total payout in your consumer proposal.

1.  Computing Assets and Recoveries

You must calculate your expected recoveries; your Licensed Insolvency Trustee or LIT can do that for you. If you file for bankruptcy, you will also want to know how much you can recover. It’s because your creditors are entitled to equity in properties you own.

In some cases, creditors can even take a certain percentage off of your income so you can pay back your debt. The more assets and higher your income, the more your creditors can get. That’s why reviewing and determining your total asset value beforehand is crucial.

2.  Agreement With Creditors

Creditors have very different expectations, so you must agree with them. All creditors should be treated fairly in your consumer proposal, so ensure that the terms and conditions you and your LIT set are fair.

The goal is to ensure your creditors are satisfied with your proposed terms. You should also consider the minimum payouts that each creditor has and how those would fit into your proposition.

3. Decide on Your Monthly Payment

You will have to check your finances and decide on your monthly payment. When creating your consumer proposal, your LIT will discuss how to pay creditors according to priority. You must determine which debts to settle first and how to pay them regularly.

The critical factor to consider is that you should be able to afford to pay on the schedule you’ve set. Your LIT will take your proposed payout, and then they will divide this depending on the length you’ve stated to pay on the proposition.

4. Finalizing the Length of Payment

Payments can last up to sixty months, depending on what you put on your proposal and what your creditors accept. If you want the lowest amount possible, you can choose sixty months to spread out each pay fully.

Then again, there is also an advantage when you pay in a shorter time. You won’t have to wait too long to clear your debt, and your creditors will appreciate the fast payment. However, only choose the latter if you can afford to pay more.

Why Opt for Consumer Proposals

When you find yourself in debt, you can choose whether to submit a consumer proposal or file for bankruptcy. Each choice depends on your financial situation and which will work for you. You have your LIT to help you decide.

Consumer proposals allow you to repay your debt and renegotiate with your creditors. A reasonable payment plan will help you gradually pay off all your debts without any problems. You’d be surprised how quickly your deficits can shrink once you start paying your monthly loans.

It helps to trust that consumer proposals will make things lighter and easier for you as a debtor. You should be paying your debts on time when the proposition gets approval. Creditors won’t go after you anymore once you’ve cleared all your debts.

Benefits of Consumer Proposals

• You‘re given another chance to pay all your debt

• You don’t have to opt for bankruptcy directly

• Your debts can be reduced by 70 to 80%

• You can repay your obligations as a lump sum or through a five-year term

• You won't have to worry about losing assets 

• Your payments will be free of interest

• You can gradually pay for all your debts all at once 

• The amount you pay monthly is lesser

• You won’t have to worry about collections agencies bothering you

It’s normal to lose track of your debts, especially when you’re already panicking and looking for ways to get out of your loans. That’s why consumer proposals are available; you only need a  LIT to help you create one.

The LIT's job is to make sure that you understand what the consumer proposal process is about. They will also help you until you finally submit the proposition to your creditors. You can ask the LIT assigned to you for everything you need to know.

Having debt is something that you shouldn’t try to brush under the rug. You are encouraged to face it and pay back what you owe, even if it’s little by little. A consumer proposal calculator makes it easier to determine how much you should pay and how much will be left for you after the proposal gets approved.