Consumer Proposal Fort Erie, Ontario – Alternatives & Important Things You Need to Know
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 Fort Erie. 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 licensed bankruptcy trustee and it costs approximately $1,500 to file. You pay an initial setup fee to begin, and then, if the arrangement is acceptable to your creditors, you then pay the balance to continue the process. The trustee you work with will additionally hold back 20% of your future payments as an administration fee. For the Consumer Proposal to be legally binding, your creditors who own the majority of your debt must agree to the proposed repayment plan. If they do, you then have to repay the agreed amount over a maximum repayment period of 5 years.
Advantages and Disadvantages of Filing for a Consumer Proposal
There are some clear advantages and disadvantages of filing for a Consumer Proposal. They include the following:
Advantages
- 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 Fort Erie, Ontario if:
- You cannot afford to pay back all the debt you owe
- You have steady income
- Your budget has enough money in it for you to make monthly payments
- Has the potential to be a good option if:
- You aren’t able to qualify for a consolidation loan
- If you have debts (like high government debt) which need to remain outside of a debt management program
- Will put active collection of student loan payments on hold
- It is one of the final ways of avoiding bankruptcy
Disadvantages
- It’s not private. A proposal is filed as a permanent public record and is included on a searchable database
- It costs more than going bankrupt
- The Consumer Proposal must be approved by a Judge
- It can be rejected by your creditors. If they reject it, you may have to offer them more money for to
- Missing more than 2 payments may mean that you need to file for bankruptcy
- Not all debts can be included (like secured loans)
- If you stopped being a student less than 7 years ago, your student loans can’t be included
- Depending on the type of assets you have, some might need to be sold
- It may affect future employment opportunities, and the permanent record of your insolvency can put certain professional licenses at risk
There’s a Way Out of Debt with Help
“I had just come to the point where I had given up hope – that there’s no way I could ever repay my debt. A friend of mine suggested I reach out, and I thought I’d get some condescending person on the phone lecture me about money, but my counsellor was the most compassionate, caring person who became sort of my own personal cheerleader.”
– Charis, 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 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.
Speak to a Non-Profit Credit Counsellor
Don't Pay Anyone But a Bankruptcy Trustee
Be Careful with Commission Based Debt Consultants
How Your Credit Will Be Impacted by a Consumer Proposal
Once you begin making payments on a Consumer Proposal, a note is placed in the public records section of your credit report that states that you have filed a proposal. Anyone who you have given permission to see your credit report can also see the public records section.
Your creditors may also report a “7” rating on any debt included in your proposal. This rating indicates that they are receiving your payments through a third party. In this case, your trustee is the third party. Your monthly payment on your Consumer Proposal is remitted to your creditors once 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.
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 Fort Erie at 1-888-527-8999. You can also email or chat with us online right now.
Related Topics
Some of these resources may also be helpful to you.
Debt Consolidation Options & Alternatives
How a Debt Management Program Works
The Differences Between Consumer Proposals & Bankruptcy
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 Ontario
- List of Licensed Bankruptcy Trustees
- Glossary of Terms Used in Insolvency
- Credit Counselling Society Ontario office locations
The Credit Counselling Society is a leading, non-profit credit counselling service provider in Fort Erie, Ontario with