Consumer Proposal Saskatchewan - Straight Facts and Other Options | Canada

What is a consumer proposal and is it the best option for me?

One option to consolidate your debts is to file a Consumer Proposal in Saskatchewan. 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.

  See if filing a Consumer Proposal in Saskatchewan, Canada is the best way of consolidating your debt and avoiding bankruptcy.
  All financial decisions have advantages and disadvantages. Consumer Proposals are not any different. A professionally certified Credit Counsellor can help you determine what is in your best interest: a proposal or another option.

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.

Advantages and Disadvantages of Filing for a Consumer Proposal

There are some clear advantages and disadvantages of filing for a Consumer Proposal. They include the following:

Advantages

   


Beware of 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 Prevent Getting Ripped Off

 

  1. Talk to a non-profit Credit Counsellor about your financial and debt situation first. They will 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.
  2. Never pay anyone for Consumer Proposal services except for a licensed bankruptcy trustee.
  3. 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.
  4. Credit Counselling Canada is 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, they’ll let you know and refer you to a reputable bankruptcy trustee for free.

 

 
       
  • It can be an effective method of debt consolidation in Saskatchewan 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:
  • 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 mater. 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

How a Your Credit Will Be Impacted by a Consumer Proposal

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 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.

Contact Us for More Information About Filing for a Consumer Proposal in Saskatchewan

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 Saskatchewan at 1-888-527-8999. You can also email or chat with us online right now.

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The Credit Counselling Society provides not for profit credit counselling services in Saskatchewan and is recognized as one of Canada's leading debt relief services with 24 offices in communities across the country.

 

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