Consumer Proposals in KitchenerLearn how they work plus what to watch out for.Consumer Proposal Kitchener, Ontario - Alternatives & Important Things You Need to KnowWhat is a consumer proposal, and is it the best option for me?One option to consolidate your debts is to file a Consumer Proposal in Kitchener. 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. Advantages and Disadvantages of Filing for a Consumer ProposalConsumer Proposals contain certain advantages and disadvantages. These can include the following:AdvantagesIt can reduce the amount of debt you need to repay your creditors by a considerable amountIt can be a helpful debt consolidation method in Kitchener, Ontario if:You cannot afford to pay back all the debt you oweYou have steady incomeYour budget has enough money in it for you to make monthly paymentsHas the potential to be a good option if:You aren't able to qualify for a consolidation loanIf you have debts (like high government debt) which need to remain outside of a debt management programWill put active collection of student loan payments on holdIt is one of the final ways of avoiding bankruptcyDisadvantagesIt's not private. A proposal is a permanent public record included on a searchable databaseIt's more expensive than declaring bankruptcyIt must be approved by the CourtCreditors can reject the Consumer Proposal - if they do, you may have to offer them additional funds otherwise your proposal will not proceedIf you miss more than 2 payments you may need to file for bankruptcyStudent loans can't be included if they are less than 7 years oldSecured debts aren't includedSome assets (such as your home, vehicles, or investments) may need to be soldThe permanent record of your insolvency can put certain professional licenses at risk and may also affect future employment opportunitiesIt'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\u2019t 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 \u2013 a lot of work \u2013 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 ClientBeware 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 OffFollow 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 non-profit Credit Counsellor about your situation first. They'll review your whole financial picture with you and help you look into and understand all of your options to resolve your debt problems and get your finances back on track.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.Find out how the person helping you is compensated. A lot of people who want to advise you on your debts work on commission. Make certain that the "solution" they are recommending is in your best interest - not theirs. How Your Credit Will Be Impacted by a Consumer ProposalOnce 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 \u201c7\u201d 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\u2019re 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 Kitchener, OntarioThere 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 Kitchener at 519-340-1013. You can also email or chat with us online right now.Kitchener-Waterloo Office: 22 King Street South, Suite 300, Waterloo, ON N2J 1N8Phone: 519-340-1013Related Articles of InterestSome of these resources may also be helpful to you. There are more debt consolidation options and alternatives than most people know about. Discover the option that will work the best for you.Find out how a Debt Management Program consolidates your payments, reduces your interest rates, and gets you out of debt.Find out the similarities and differences between Consumer Proposals and Bankruptcy, and learn what to watch out for.Putting Your Interests FirstOur 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 \tThe Office of the Superintendent of Bankruptcy for Ontario \tList of Licensed Bankruptcy Trustees \tGlossary of Terms Used in Insolvency \tCredit Counselling Society Ontario office locations The Credit Counselling Society is a leading, non-profit credit counselling service provider in Kitchener, Ontario with 22 locations across Canada. We also provide consumer proposal information in Guelph, Waterloo, Cambridge, Bingemans, Breslau, St. Agatha, Petersburg, New Dundee, Baden, Hespeler, Preston, New Hamburg, Shakespeare, Tavistock, Stratford, Woodstock, Brantford, and Hamilton.