Consumer Proposal Grande Prairie, Alberta – Straight Facts and Other Options
What is a consumer proposal, and could it be the best option for my situation?
One option to consolidate your debts is to file a Consumer Proposal in Grande Prairie. It is a legal process under the Bankruptcy and Insolvency Act between you and your creditors to repay part of what you owe. The amount you repay is largely based upon your income and what you own.
A Consumer Proposal can only be arranged and administered by a bankruptcy trustee and costs about $1,500 to file. You pay an initial setup fee, and then, if it is accepted by your creditors, you will pay the remaining balance to proceed. In addition to this, the trustee will also retain 20% of your future payments as a fee for administering your Consumer Proposal. To be legally binding, the creditors who hold the majority of your debt must agree to the proposal. Once they do, you repay the agreed amount over a maximum of 5 years.
The Advantages & Disadvantages of Filing a Consumer Proposal in Alberta
There are definitely advantages and disadvantages to filing a Consumer Proposal. Here are some that are important to be aware of:
Advantages
- It can significantly reduce the amount of debt you have to repay your creditors
- It can be an effective method of debt consolidation in Grande Prairie, Alberta if:
- You don’t have the ability to repay all the debt you owe
- You have consistent income
- You’ve put together a monthly budget, and you can afford to make monthly payments
- Could be a worthwhile option if:
- You aren’t able to get approved for a debt consolidation loan
- If you have debts (like a large government debt) which can’t be paid through a debt management program
- Will stop active collection activity on student loan payments
- It is one of the last methods of avoiding personal bankruptcy
Disadvantages
- It’s not private. A proposal is a permanent public record included on a searchable database
- It’s more expensive than declaring bankruptcy
- It must be approved by the Court
- Creditors can reject the Consumer Proposal – if they do, you may have to offer them additional funds otherwise your proposal will not proceed
- If you miss more than 2 payments you may need to file for bankruptcy
- Student loans can’t be included if they are less than 7 years old
- Secured debts aren’t included
- Some assets (such as your home, vehicles, or investments) may need to be sold
- The permanent record of your insolvency can put certain professional licenses at risk and may also affect future employment opportunities
There’s Life Beyond Debt for Everyone
“When debts became a problem, I felt very overwhelmed – like I could not see the end of the tunnel. Picking up the phone felt like lifting a 10 pound rock, but they were very cheerful on the other end of the line. I came in, discussed my situation in privacy, and instantly got relief knowing I was in good hands.”
– Delores, Actual Client
Watch Out for the Big Debt Rip-Off
Consumer Proposals have become the newest way for a growing number of companies and their sales people to take advantage of unsuspecting, vulnerable Canadians. Don’t let this happen to you! A lot of companies offering debt relief are now claiming to provide Consumer Proposals as a great way of getting out of debt. But there’s a problem. Only a government licensed bankruptcy trustee is permitted to file paperwork for a Consumer Proposal. These debt relief companies bill people for thousands in fees only to refer them to a bankruptcy trustee who then charges his or her own fees.
How to Prevent Getting Ripped Off
Follow the three tips below plus start by speaking with a member of Credit Counselling Canada (an association of non-profit credit counselling agencies who do not work on commission). If a Consumer Proposal is truly one of your best options, one of their agencies can let you know and refer you to a reputable bankruptcy trustee for free.
Talk to a Not-for-Profit Credit Counsellor
Don't Pay Anyone But a Bankruptcy Trustee
Watch Out for Commission Based Debt Consultants
Discover Your Options
A Visual Overview of Possible Options
Here are some options that may be available to you based on the information you have provided about your financial situation. The most likely options are in green, less likely in yellow, and least likely in red. This is only intended to provide you with a general idea of the options that may be available to you. A credit counsellor will need to go over your information in much more detail to make a more precise determination.0
Option
Do a Deeper Dive to Uncover More Options
It looks as though your situation requires more in-depth analysis from a trained credit counsellor. They can help you optimize your budget, explore options, and create a plan to get back on track.
0
Option
Self-Managed Solution
After thoroughly exploring your options with a credit counsellor, they can help you put together a plan to get out of debt in a reasonable amount of time. You can then implement this plan on your own.
0
Option
Debt Consolidation Loan
Based on the information you've provided, it appears as though this could be a possibility if your credit score is strong enough.
0
Option
Debt Management Program
It appears as though this may be an option for you. A Debt Management Program eliminates or drastically reduces interest and consolidates all payments into one.
0
Option
Consumer Proposal
This may be an option for you to consider. It's a legal process that consolidates all payments into one. Talk to a credit counsellor about this and see if it makes sense for your situation.
0
Option
Bankruptcy
Based on the information you've entered, it appears as though bankruptcy may be an option to resolve your financial challenges. You should speak with a credit counsellor about this and make sure you've exhausted all other options first.
0
Option
Orderly Payment of Debts
Based on what you've entered, it looks as though an Orderly Payment of Debts (OPD) program may be an option for you. To find out if this would make sense for your situation, you should speak with a credit counsellor.
0
Option
Voluntary Deposit
Based on the information you've provided, it looks as though a voluntary deposit program may be an option to address your debt situation.
0
Bonus Option
Online Workshops
Learn how to improve your financial situation, create a budget, make your dollars stretch further, and get out of debt with one of our many helpful online workshops we call webinars.
More Specifics on How We Can Help You
Get Help Today
Give us a call to speak with one of our credit counsellors at 1-888-527-8999, or if you'd like us to contact you instead, please fill out the form below.How a Consumer Proposal Impacts Credit
When you make payments on a Consumer Proposal, there is a note on your credit report in the public records section that you have filed a proposal. Anyone who has your consent to see your credit report will see the public records section as well.
In addition, your creditors may report a “7” rating on the debts included in the proposal. This means that they are receiving payments through a third party. The third party is your trustee. When you make a payment to your trustee, they disburse the agreed upon amount to each of your creditors after all applicable fees have been paid.
If you are making monthly payments to secured creditors (like paying for a vehicle loan) outside of your Consumer Proposal, those debts will be reported separately by the creditors that you are paying. If you can create and stick with a realistic budget, then it should make this easier.
If you are able to keep up a good payment history on any secured debts while you are paying off your proposal, this can assist you in re-building your credit more quickly afterwards.
Between financial difficulty and bankruptcy there can be many options. While a consumer proposal may be a good option for some, it isn’t the best option for everyone. To find out what options you have, call one of our professionally certified Credit Counsellors today. You can speak with a Counsellor in person or over the phone. Appointments with them are free, non-judgmental, and completely confidential.
For more information or to speak with a Counsellor, contact us in Grande Prairie at 1-888-527-8999. You can also email or chat with us online right now.
Related Articles of Interest
Here are some related topics that may be useful for you.
Debt Consolidation Options & Alternatives
How a Debt Management Program Works
Consumer Proposal vs Bankruptcy - The Differences
Putting Your Interests First
Our goal is to always put consumers first and look out for their best interests in everything we do. One way we do this is through transparency and accountability. We are held accountable to the most rigorous standards in our industry.
Related Links
- The Office of the Superintendent of Bankruptcy for Alberta
- List of Licensed Bankruptcy Trustees
- Glossary of Terms Used in Insolvency
- Credit Counselling Society Alberta office locations
The Credit Counselling Society is an award winning, non-profit credit counselling service provider in Grande Prairie, Alberta with