Smiths Falls Consumer Proposal Information & Alternatives
Learn how they work plus what to watch out for.

Consumer Proposal Smiths Falls, Ontario – Straight Facts and Other Options

What is a consumer proposal, and is it my best option?

If you are looking to consolidate your debts, one option available is to file a Consumer Proposal in Smiths Falls. 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 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.

Consumer Proposal Advantages and Disadvantages

There are definitely advantages and disadvantages to filing a Consumer Proposal. Here are some that are important to be aware of:

Advantages

  • It can substantially reduce the amount of debt you are required to pay your creditors
  • It can be an effective way of consolidating debt in Smiths Falls, Ontario 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:
  • 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 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 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

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.

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

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 a Consumer Proposal Impacts Credit

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.

Call Us to Learn More About Filing a Consumer Proposal in Smiths Falls, 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 Smiths Falls at 1-888-527-8999. You can also email or chat with us online right now.

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How a Debt Management Program Works

Learn how a Debt Management Program can consolidate your payments, eliminate interest rates, and get you out of debt and back on track.

Consumer Proposal vs Bankruptcy - The Differences

Learn how Consumer Proposals and Bankruptcy are similar and how they are different. Also learn what you need to watch out for.

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.