How Taxes works in consumer Proposal?
Do you want to get rid of debt? In that case, if you are getting a fixed income a consumer proposal can be the best option than getting into bankruptcy. The consumer proposal would help safeguard your assets and clear your debts to unsafe creditors.
The consumer proposal helps the interest increasing on the debt, halts collection calls and halts wage trimming. Under a consumer proposal, you can easily pay off a less and small part of the total debt you have with the help of a single monthly payment during a span of 5 years or lesser than that. You can pay for it anytime.
Let us understand what does consumer proposal mean?
It is an alternate option to bankruptcy created for those who are unable to pay off their debts to the unsecured creditors. You can create a new agreement with the help of a Licensed Insolvency Trustee with the creditors to pay off a lesser amount.
The monthly debts amount that you have to pay is completely based on the income you get and the amount that you can manage to pay as a debt payment.
The consumer proposal proves to be an ideal option for all those who are engaged in the process.
Type of debts that consumer proposal covers are
All the unsecured debts that you own are taken care of by the consumer proposal. It includes utility bills that are not paid, debt related to credit card, payday loans, and also the amount you owe to the Canada Revenue Agency. The consumer proposal is meant for all the debts below $250,000 (excluding mortgage). In case the debt amount is above $250,000 then you are entitled to the proposal – Division 1. You can visit gtacredit.com to get rid of debt with the help of a consumer proposal.
How do Taxes work in a consumer proposal?
Well, if you are planning to file your tax returns then it can be a cumbersome task if you are under debts or planning to file a consumer proposal. There are a lot of misunderstandings regarding the taxes you pay upon filing a consumer proposal and you may get in the trap of such misunderstandings as taxes are handled differently when it comes to consumer proposal rather than a bankruptcy.
The best source to get all your misunderstanding clear about your taxes is to seek help from a GTA CREDIT counselor or an Insolvency Trustee and you will get all the answers to your questions about your financial status and what exactly the consumer proposal has in store for you. The trustee helps you all through the process of a consumer proposal, for example, your assets, taxes, credit rating, etc.,
There are some basic things that you should be aware of how the taxes work while filing a consumer proposal.
In case of bankruptcy, you will need to cease the tax refund the same as you actually would pay a portion of your income as part of a legacy or any increment in your salary. On the other hand, the consumer proposal acts differently. You agree on certain payment terms with your creditors wherein you set a fixed amount to be paid on a monthly basis over a time span of 5 years. The agreement will not alter until and unless you choose to replace it with a new agreement that includes a quick rate for paying back the debt amount. The basic idea behind why a person should seek help via consumer proposal is to secure his/her increments in income in the near future.
Do you need to file taxes while seeking a consumer proposal?
It is recommended that you file the taxes while seeking a consumer proposal as if you miss filing taxes it could intervene in your agreement. In case of bankruptcy you need to file pre as well as a post-bankruptcy tax return.
When you opt for a consumer proposal or bankruptcy it is always better to seek credit counselling. Credit counseling helps you plan your credit and use it wisely and stay away from debt in the coming years.
You can get detailed information from the gtacredit.com or trustee as they help you create a consumer proposal and file the consumer proposal for you. They try to negotiate the amount with your unsecured creditors so they act as intermediaries between both you and the unsecured creditors.
They also help you learn how to utilize your credit and provide tailored counseling for dealing with your credit in the near future. They make sure that the agreement rules are followed by both the parties.
There are benefits linked to consumer proposal and they are
- No need to file bankruptcy
- Can protect your assets
- The unsecured creditors will halt any collection actions that they take against you.
- Any of the deductions on your bank accounts or wages will be cancelled.
- You can pay even lesser amounts to the unsecured creditors as payback amount. This entirely depends on how much you can pay based on your income. All these payment terms are taken care of while filing a consumer proposal.
- Once you file consumer proposals there will be no penalties or increased interest rates for you to pay.
The consumer proposal doesn’t include any disbursement of your assets like vehicles or house etc. in case you mortgaged your house then you need to pay the required amount to protect your house. The same applies to a car or any other secured loans. Remember, secured debts like car loans, home loans or mortgages are not taken care of in consumer proposals.
Upon completion of your consumer proposal, you are freed from all unsecured debt payments that are included in a consumer proposal. Basically the debt amount that you are supposed to pay in a consumer proposal is quite less as compared to the debt amount you owe.
A consumer proposal can help you with debts and you won’t find land in a situation where you find yourself under debts and it becomes impossible to overcome such situations. Any help for financial problems contact gtacredit.com or call 416 650 1100
