Consumer Proposal Wasaga Beach, Ontario – Other Options & Stuff You Need to Know
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 Wasaga Beach. 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.
The Advantages & Disadvantages of Filing a Consumer Proposal in Ontario
There are definitely advantages and disadvantages to filing a Consumer Proposal. Here are some that are important to be aware of:
- It can significantly reduce the amount of debt you have to repay your creditors
- It can be an effective method of debt consolidation in Wasaga Beach, 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:
- 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
- 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 Life Beyond Debt for Everyone
“When debts became a problem, I felt very overwhelmed – like I could not see the end of the tunnel. Picking up the phone felt like lifting a 10 pound rock, but they were very cheerful on the other end of the line. I came in, discussed my situation in privacy, and instantly got relief knowing I was in good hands.”
– Delores, Actual Client
Watch Out for the Big Debt Rip-Off
Consumer Proposals have become the newest way for a growing number of companies and their sales people to take advantage of unsuspecting, vulnerable Canadians. Don’t let this happen to you! A lot of companies offering debt relief are now claiming to provide Consumer Proposals as a great way of getting out of debt. But there’s a problem. Only a government licensed bankruptcy trustee is permitted to file paperwork for a Consumer Proposal. These debt relief companies bill people for thousands in fees only to refer them to a bankruptcy trustee who then charges his or her own fees.
How to Keep from Getting Ripped Off
Follow the three tips below plus start by speaking with a member of Credit Counselling Canada (an association of non-profit credit counselling agencies who do not work on commission). If a Consumer Proposal is truly one of your best options, one of their agencies can let you know and refer you to a reputable bankruptcy trustee for free.
Speak to a Non-Profit Credit Counsellor
Only Pay a Trustee for a Consumer Proposal
Be Careful with Commission Based Debt Consultants
How a Consumer Proposal Can Impact Your 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 monthly payments to secured creditors (like paying for a vehicle loan) outside of your Consumer Proposal, those debts will be reported separately by the creditors that you are paying. If you can create and stick with a realistic budget, then it should make this easier.
If you are able to keep up a good payment history on any secured debts while you are paying off your proposal, this can assist you in re-building your credit more quickly afterwards.
Between financial difficulty and bankruptcy there can be many options. While a consumer proposal may be a good option for some, it isn’t the best option for everyone. To find out what options you have, call one of our professionally certified Credit Counsellors today. You can speak with a Counsellor in person or over the phone. Appointments with them are free, non-judgmental, and completely confidential.
For more information or to speak with a Counsellor, contact us in Wasaga Beach at 1-888-527-8999. You can also email or chat with us online right now.
Here are some related topics that may be useful for you.
Debt Consolidation Options & Alternatives
Find Out 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.
- 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 an award winning, non-profit credit counselling service provider in Wasaga Beach, Ontario with