Consumer Proposals in Guelph
What you need to know and watch out for.

Consumer Proposal Guelph, Ontario – Alternatives & Important Things You Need to Know

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

Filing a Consumer Proposal in Guelph is a debt repayment option that allows some people to consolidate their debts. It is a legal process between you and your creditors to repay a portion of what you owe, and it is governed by the Bankruptcy and Insolvency Act. To a large extent, the amount of debt you repay to your creditors is based on your income and what you own.

A Consumer Proposal can only be arranged and administered by a bankruptcy trustee and costs about $1,500 to file. You pay an initial setup fee, and then, if it is accepted by your creditors, you will pay the remaining balance to proceed. In addition to this, the trustee will also retain 20% of your future payments as a fee for administering your Consumer Proposal. To be legally binding, the creditors who hold the majority of your debt must agree to the proposal. Once they do, you repay the agreed amount over a maximum 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 significantly reduce the amount of debt you have to repay your creditors
  • It can be an effective method of debt consolidation in Guelph, 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 private. A proposal is a permanent public record included on a searchable database
  • It’s more expensive than declaring bankruptcy
  • It must be approved by the Court
  • Creditors can reject the Consumer Proposal – if they do, you may have to offer them additional funds otherwise your proposal will not proceed
  • If you miss more than 2 payments you may need to file for bankruptcy
  • Student loans can’t be included if they are less than 7 years old
  • Secured debts aren’t included
  • Some assets (such as your home, vehicles, or investments) may need to be sold
  • The permanent record of your insolvency can put certain professional licenses at risk and may also affect 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 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 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.

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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.
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Only Pay a Trustee for a Consumer Proposal

Never hand over money to anyone for Consumer Proposal services except a government licensed bankruptcy trustee. The law states that only they are allowed to offer and get paid for these services.
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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.
You Probably Have Other Options
See What They Are
You may have an idea of how to resolve your financial situation, but it's very possible that other viable options are available to you - other options that could potentially resolve your situation more quickly, with far more privacy, or with less impact to your credit or career. Every option has pros and cons, but it's worth taking a few minutes to see what your options look like and whether you think you'd like to look into any of them further.

How 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 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 Guelph, Ontario and Possible Alternatives

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 Guelph at 519-340-1013. You can also email or chat with us online right now.

Office Serving Guelph: 22 King Street South, Suite 300, Waterloo, ON N2J 1N8

Phone: 519-340-1013

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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.

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