In short, a debt consolidation loan enables you to simplify your debts and potentially reduce the overall interest rate although there is no guarantee. In short, you still retain your debt whether you can afford it or not. In contrast, a consumer proposal is a proposed monthly repayment amount that is agreed by you.. In other words a consumer proposal provides the benefits of both debt consolidation and debt settlement. There are several advantages of a consumer proposal over debt consolidation: Proposals are interest free. You settle your debt for less than you owe. They deal with all your debts.

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A consumer proposal is often considered a preferable alternative to bankruptcy if you qualify. With a consumer proposal, applicants often pay less than what they initially owed. A consumer proposal can reduce your debt by up to 70% or 80%. You will likely be able to keep most of your assets as well.. Debt consolidation entails taking out a new loan from a bank, credit union, or other financial institution. On the other hand, a consumer proposal isn't a loan but rather a way to negotiate a debt settlement with your creditors. The result is that you end up paying less than you owe. Lenders don't offer consumer proposals.