Alternatives to a Consumer Proposal
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True Cost of Consumer Proposals
The success of a consumer proposal is never guaranteed, but its cost and risks are. After talking to a trustee and agreeing to start the process, you’ll pay $750 upfront to apply for the proposal. If accepted, you’ll pay another $750, for a total of $1500. That’s not all. 20% of your consumer proposal payments also goes to your trustee for their services. All fees that go to them, including the application cost and their portion of your payments, is additionally taxed with GST.
But what if your proposal gets rejected? The fact is that creditors will only accept a proposal that gives them more value than if you declared bankruptcy. They figure this out by looking through the financial info you gave them in your consumer proposal paperwork.
If your proposal is rejected, you’ll be out about $750 but still have all your other options available. However, the problem is that your creditors will now know everything about your assets and liabilities – because your trustee provided this info on the paperwork. This can make it harder to negotiate payments for other options in the future, like when your mortgage comes up for renewal.
If your consumer proposal is accepted and you miss 3 monthly payments, the proposal will be automatically cancelled and you won’t be able to reapply. Collection activities will resume while you try to figure out what to do and your creditors will come after you again for everything you still owe – knowing full well about all your assets and liabilities. Whether successful or not, consumer proposals are also public record. Finally, it will damage your credit rating for as much as 8 years (5 years of payments plus 3 years once they’re done).
Make sure that a consumer proposal is truly the best option for you before committing to one, especially if you have joint debt, or a partner in your household who is not part of the debt. We can help you figure this out for free.
Getting Rid of Debt
We’re happy to help you figure out your options. There are more than you might think.
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