Oakville Consumer Proposal Information & Alternatives
What you need to know and watch out for.
Consumer Proposal Oakville, Ontario – Straight Facts and Other Options
What is a consumer proposal, and could it be the best option for my situation?
If you are looking to consolidate your debts, one option available is to file a Consumer Proposal in Oakville. 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 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.
Consumer Proposal Advantages and Disadvantages
There are some clear advantages and disadvantages of filing for a Consumer Proposal. They include the following:
It can substantially reduce the amount of debt you are required to pay your creditors
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
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 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.
Speak to a Non-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.
Watch Out for Commission Based Debt Consultants
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.
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How a Consumer Proposal Impacts Credit
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 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.
Call Us to Learn More About Filing a Consumer Proposal in Oakville, Ontario and Possible Alternatives
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 Oakville at 647-776-0485. You can also email or chat with us online right now.
Office Serving Oakville: 77 City Centre Drive, East Tower, Suite 501, Mississauga, ON L5B 1M5
Learn the difference between a Consumer Proposal and Bankruptcy. Find out how they are different and how they are similar.
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