Why is a consumer proposal three times less expensive than credit counselling?

Bankruptcy_Trustee_meeting-150x150Why is a consumer proposal three times less expensive than credit counselling?

It is three times less expensive for a consumer to eliminate one dollar of debt using a consumer proposal compared with credit counselling. Credit counselling agencies offer consumers the opportunity to reduce their monthly payments by enrolling in a Debt Management Plan. A consumer will typically repay the monies owing to these creditors by way of monthly installments over a significant period of time. One of the advantages of a Debt Management Plan is that a representative from the credit counselling agency will attempt to negotiate some interest relief concerning the interest accruing during the life of the Debt Management Plan.

It will cost a consumer somewhere between $1.10 and $1.30 to eliminate one dollar of debt under a Debt Management Plan. There are three different cost centres under a Debt

Management Plan:

  1. Consumer repays 100 percent of the outstanding monies owing on the date of enrollment
  2. Consumer pays a fee to the Debt Management Plan provider
  3. Consumer may be required to pay some interest on the monies owing during the life of the Debt Management Plan

In contrast, a consumer will typically pay somewhere between 30 cents and 40 cents to eliminate one dollar of debt under a consumer proposal arranged through a bankruptcy trustee. Assuming a consumer proposal is accepted by the consumer’s creditors then the consumer can make monthly installment payments for a period not to exceed five years.


Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form januvia medication. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.

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