Consumer Proposal Wetaskiwin, Alberta – Alternatives & Important Things You Need to Know
What is a consumer proposal, and is it the best option for me?
If you are looking to consolidate your debts, one option available is to file a Consumer Proposal in Wetaskiwin. This is a legal process governed by the Bankruptcy and Insolvency Act between yourself and your creditors to pay back a portion of the debt you owe. The amount of debt that you repay is mainly based on your income and what assets 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:
- It can reduce the amount of debt you need to repay your creditors by a considerable amount
- It can be a helpful debt consolidation method in Wetaskiwin, 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
- 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
Beware of the Big Debt Rip-Off
Consumer Proposals have become the latest method for a growing number of for-profit companies and their sales people to take advantage of vulnerable, unsuspecting consumers. Don’t let this happen to you! Many debt relief companies are now claiming to offer Consumer Proposals as an easy way to get out of debt. There’s a problem. Only a licensed bankruptcy trustee is allowed to file paperwork for a Consumer Proposal. The debt relief companies charge thousands in fees only to refer you to a bankruptcy trustee who then charges his or her own fees.
How to Keep from Getting Ripped Off
Follow the tips outlined below, but start by speaking to a member of Credit Counselling Canada (a national association of non-profit credit counselling organizations who don’t work on commission). If a Consumer Proposal is a truly good option for you, one of their agencies will inform you 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
How Your Credit Will Be Impacted by a Consumer Proposal
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 payments to secured creditors, like for a car loan, outside of your Consumer Proposal, those creditors will report on those debts separately. Creating and sticking to a realistic budget will make this easier.
If you are able to maintain a good payment history on a secured debt while you’re making your proposal payments, this can help you re-build credit afterwards.
There are quite a number of options between financial difficulty and bankruptcy. A Consumer Proposal might be one good option for some people, but it’s not the best option for everyone. To find out what other options you have, speak with one of our professionally trained Credit Counsellors today, in person or over the phone. Our appointments are free, non-judgmental, and completely confidential.
To ask us some questions or to make an appointment to speak with a Counsellor, phone us in Wetaskiwin at 1-888-527-8999. You can also email or chat with us online right now.
You may find some of these articles to be helpful.
Debt Consolidation Options & Alternatives
How Does a Debt Management Program Work?
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.
- The Office of the Superintendent of Bankruptcy for Alberta
- List of Bankruptcy Trustees
- Insolvency Glossary
- Credit Counselling Society Alberta office locations
The Credit Counselling Society is an award winning, non-profit credit counselling service provider in Wetaskiwin, Alberta with