Consumer Proposal Humboldt, Saskatchewan – Alternatives & Important Things You Need to Know

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

Advantages

It can reduce the amount of debt you need to repay your creditors by a considerable amount
It can be a helpful debt consolidation method in Humboldt, Saskatchewan 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

Disadvantages

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

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 suggestions below and begin by talking to an accredited member of Credit Counselling Canada (Canada’s national association of not-for-profit credit counselling organizations who never pay their employees commission). If the agency you speak to believes that a Consumer Proposal would truly be one of your best options, they’ll let you know and refer you to a reputable bankruptcy trustee in your area for free..

Talk to a Not-for-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 a Consumer Proposal

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

Ask how the person helping you is compensated. Many people who will seek to advise you on your debts work on commission. Make sure the “solution” they are suggesting is in your best interest – not theirs.

How a Your Credit Will Be Impacted by a Consumer Proposal

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.

Call Us to Learn More About Filing a Consumer Proposal in Humboldt, Saskatchewan and Possible Alternatives

When you’re experiencing financial difficulty, you may think that bankruptcy is your only option. There are a lot of options to deal with debt in Canada. A Consumer Proposal isn’t the right option for everyone, but it can be a good option for some people. To find out what options might be right for you, call one of our accredited, professional Debt Counsellors today. Our appointments are either in person or over the phone. They don’t cost you anything, are non-judgmental, and are completely confidential.

For more information or to arrange an appointment to speak with one of our Counsellors, contact us in Humboldt at 1-888-527-8999. You can also email or chat with us online right now.

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