Consumer Proposals in Victoria

What you need to know and watch out for.

Consumer Proposal Victoria, BC – Alternatives & Important Things You Need to Know

Name: Credit Counselling Society
Address: 214 - 1175 Cook Street, Victoria, British Columbia, V8V 4A1
Telephone: 250-382-9559
Rating: 5

What is a consumer proposal, and could it be the best option for my situation?

Filing a Consumer Proposal in Victoria is a debt repayment option that allows some people to consolidate their debts. It is a legal process between you and your creditors to repay a portion of what you owe, and it is governed by the Bankruptcy and Insolvency Act. To a large extent, the amount of debt you repay to your creditors is based on your income and what you own.

A Consumer Proposal can only be setup by a bankruptcy trustee and costs around $1,500. You’ll pay an initial setup fee, and if it is accepted by your creditors, you will pay the balance to proceed. In addition, the trustee will keep 20% of your future payments as your Consumer Proposal administration fee. For the proposal to be legally binding, the creditors who own the majority of your debt must agree to the arrangement. If they do, then you will be required to repay the agreed upon amount over a maximum term of 5 years.

Advantages and Disadvantages of Filing for a Consumer Proposal

Consumer Proposals contain certain advantages and disadvantages. These can include the following:

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 Victoria, BC if:
- You can’t afford to repay all of what you owe
- You have stable income
- You have enough money in your budget to make monthly payments
It will pause active collection on student loan payments
Can be a good option if:
- You don’t qualify for a debt consolidation loan
- If you have debts (like high government debt) that can’t be included in a debt management program
It is one of the last ways to avoid bankruptcy

Disadvantages

It’s not a private matter. A Consumer Proposal is filed as a permanent public record and is included on a searchable database
It costs more than filing for bankruptcy
The Court must approve it
Creditors can choose to reject the proposal. If they do, you may need to offer them additional funds to convince them to proceed
You might need to sell some of your assets (such as a vehicle, your home, or investments)
You may need to file for bankruptcy if you miss more than 2 payments
Secured debts cannot be put into a proposal
Student loans less than 7 years old can’t be included
It can put certain professional licenses at risk, and the permanent record of your insolvency may also affect some future employment opportunities

It’s Okay to Ask for Help with Debt

“Life just happened. My debt got to the point where I started to feel like I was drowning. I didn’t feel like I could fix it on my own, and I wanted to start living my life as an adult without debt. I decided to reach out for help. Feeling relieved, I knew that everything was going to be okay – a lot of work – but okay. I had a plan to pay back my debt and continue doing the things I love to do like yoga and travelling.”

– Yasmine, Actual Client

Beware of the Big Debt Rip-Off

Consumer Proposals have unfortunately become the latest way for an increasing number of debt relief companies and their sales people to take advantage of vulnerable, unsuspecting consumers. Make sure you don’t let this happen to you! Many of these companies are now claiming to offer Consumer Proposals as an effective way to deal with debt. But there’s a problem. In Canada, only a licensed bankruptcy trustee is legally allowed to deal with Consumer Proposals. These debt relief agencies charge thousands of dollars in fees but then refer you to a bankruptcy trustee who then charges his or her own legitimate fees.

How to Prevent Getting Ripped Off

Follow the three suggestions below and begin by talking to an accredited member of Credit Counselling Canada (Canada’s national association of not-for-profit credit counselling organizations who never pay their employees commission). If the agency you speak to believes that a Consumer Proposal would truly be one of your best options, they’ll let you know and refer you to a reputable bankruptcy trustee in your area for free.

Talk to a Not-for-Profit Credit Counsellor

Speak with a non-profit Credit Counsellor about your financial situation first. They will be able to review your situation with you and help you explore and understand all your options to deal with your debt.

Only Pay a Trustee for Consumer Proposal Services

Never pay money to anyone for Consumer Proposal services except a licensed bankruptcy trustee. According to the law, only a licensed trustee is allowed to do the work and charge for Consumer Proposals.

Be Careful with Commission Based Debt Consultants

Ask how the person helping you is compensated. Many people who will seek to advise you on your debts work on commission. Make sure the “solution” they are suggesting is in your best interest – not theirs.

Find Out What Options May Be Available to You
by Answering 9 Simple Questions

Just answer these easy, multiple-choice questions to get a look at your potential options. Within a few minutes, you'll be looking at summarized options and results that apply specifically to your situation.

Discover Your Options

1. How would you describe your financial situation? Please move the slider along the scale to reflect approximately where you feel you're at.

I can cover all my expenses each month, plus have the ability to save.

I can cover my monthly expenses, but I need to borrow, work extra, etc.

I can no longer cover all my expenses every month.

2. Which of the following best describes you?

I pay off my balances in full each month I carry a balance but my debts are in “good standing” I carry a balance and I am behind in my regular payments I am receiving collection calls, letters, or threats to repossess assets I have been sued by one or more creditors

3. How stressed do you feel about your debt?

Not stressed

Somewhat stressed

Very stressed

4. Do you have any of the following significant assets? (Check all that apply)

Vehicle(s) Property Investments

5. Do you have any of the following secured debts? (Check all that apply)

Mortgage Vehicle Loan Line of Credit (Secured) Loan (Secured)

6. Do you have any of the following unsecured debts? (Check all that apply)

Credit Card Line of Credit (Unsecured) Payday Loan Overdraft (Unsecured) Outstanding balance with a service provider (phone/internet, utilities, gyms, etc.)

7. Do you have any of the following government debts? (Check all that apply)

Canada Revenue Agency (CRA) Debt Student Loan

8. What have you done up to this point for your debt? (Check all that apply)

I have contacted a bank or credit union for help. I have contacted a financial professional. I have discussed my situation with friends or family. I'm not sure where to start. I have done some research but need help understanding things. I don’t have any income to work with.

9. What province or territory do you live in?

Calculations - Hidden from Users

General Numbers: Income: $ People in Household: Housing Expenses: $ Food Expenses: $ Transportation: $ Medical Expenses: $ Support Payments: $ Home Value: $ Mortgage Balance: $ Other Assets: $ Government Debt Amount: $ Secured Debt Amount: $ Unsecured Debt Amount: $ Debt Payments: $ Debt Payments as % of Income: %

Debt Relief Numbers: Needs Help?: Assets can pay off consumer debt?: DMP Qualifier Redline (Debt to Income Level): % (Line at 23%) Debt Amount > Min: '' (5K+ Ideal, 3K Min) Income: $ - Survival Expenses: $ Income - Survival Expenses: $ Minimum DMP Payment: $ Can afford a DMP: Qualifies for DMP: Consumer Proposal: Debt over $5,000?: Lowest CP Payment Est.: $ Enough income for CP payments? : , $ Bkrpt Exemption Amount: $ Amount over(+)/under(-) guideline: $ Over $200 above guideline?: Qualifies for CP: Insolvency Insolvent?:

How Your Credit Will Be Impacted by a Consumer Proposal

Once you enter into a Consumer Proposal, a special notation is placed on your credit report in the public records section. Anyone who you allow to look at your credit report can see the public records section.

Additionally, it is possible that your creditors will report a “7” rating on any debt included in the proposal. This “7” rating means that creditors are receiving your payments through a third party. In this instance the third party would be your trustee. When you send a payment to your trustee, they distribute the agreed upon dollar amounts to all of your creditors once all applicable fees have been paid.

If you are paying secured creditors, like those who hold your car loan, outside of your Consumer Proposal, those creditors will report your payments on those debts separately. Creating and maintaining a realistic budget will make it easier to keep these debts paid up to date.

If you are able to show a good payment pattern on a secured debt while you’re making all of your proposal payments, you’ll be that much further ahead afterwards when you want to re-build your credit.

Contact Us for More Information About Filing for a Consumer Proposal in Victoria, BC

When you’re experiencing financial difficulty, you may think that bankruptcy is your only option. There are a lot of options to deal with debt in Canada. A Consumer Proposal isn’t the right option for everyone, but it can be a good option for some people. To find out what options might be right for you, call one of our accredited, professional Debt Counsellors today. Our appointments are either in person or over the phone. They don’t cost you anything, are non-judgmental, and are completely confidential.

For more information or to arrange an appointment to speak with one of our Counsellors, contact us in Victoria at 250-382-9559. You can also email or chat with us online right now.

Victoria Office
Cook Medical Building, Suite 214 – 1175 Cook Street, Victoria, BC V8V 4A1

Phone: 250-382-9559

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Consumer Proposal Victoria, BC – Alternatives & Important Things You Need to Know