Consumer Proposals in Windsor
Consumer Proposal Windsor, Ontario – Other Options & Stuff 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 Windsor. 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 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 some clear advantages and disadvantages of filing for a Consumer Proposal. They include the following:
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 Windsor, 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 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 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
Only Pay a Trustee for Consumer Proposal Services
Be Careful with Commission Based Debt Consultants
How a Consumer Proposal Can Impact Your 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 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.
To ask us some questions or to make an appointment to speak with a Counsellor, phone us in Windsor at 1-888-527-8999. You can also email or chat with us online right now.
Related Resources
Here are some related topics that may be useful for you.
Debt Consolidation Options & Alternatives
Find Out How a Debt Management Program Works
Consumer Proposal vs Bankruptcy - The Differences
Ensuring Your Interests are Always First
In everything we do, our goal is to always put the interests of consumers first and do what is best for them. Two important ways we pursue this is through transparency and accountability. We are held accountable to the highest and most demanding standards in our industry.
- The Office of the Superintendent of Bankruptcy for Ontario
- List of Licensed Bankruptcy Trustees
- Insolvency Terms & What They Mean
- Credit Counselling Society Ontario office locations
The Credit Counselling Society provides not for profit credit counselling services in Windsor, Ontario and is recognized as one of Canada’s leading debt relief services with offices in communities across the country.