Consumer Proposal Fort McMurray, Alberta - Alternatives & Important Things You Need to Know
What is a consumer proposal, and is it my best option?
One option to consolidate your debts is to file a Consumer Proposal in Fort McMurray. 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 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.
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:
- It can significantly reduce the amount of debt you have to repay your creditors
- It can be an effective method of debt consolidation in Fort McMurray, Alberta if:
- You don't have the ability to repay all the debt you owe
- You have consistent income
- You've put together a monthly budget, and you can afford to make monthly payments
- Could be a worthwhile option if:
- Will stop active collection activity on student loan payments
- It is one of the last methods of avoiding personal bankruptcy
- 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
"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
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.
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.
Talk to a Not-for-Profit Credit Counsellor
Speak with a non-profit Credit Counsellor about your financial situation first. They will be able to review your situation with you and help you explore and understand all your options to deal with your debt.
Only Pay a Trustee for Consumer Proposal Services
Never pay money to anyone for Consumer Proposal services except a licensed bankruptcy trustee. By law, they are the only ones allowed to provide these services and receive payment for their services.
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 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.
Contact Us for More Information About Filing for a Consumer Proposal in Fort McMurray, Alberta
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 Fort McMurray at 1-888-527-8999. You can also email or chat with us online right now.
Some of these resources may also be helpful to you.
Debt Consolidation Options & Alternatives
A lot of people are surprised to find out there are more debt consolidation options and alternatives than they knew about. Learn more about these.
How a Debt Management Program Works
Find out how a Debt Management Program consolidates your payments, reduces your interest rates, and gets you out of debt.
- The Office of the Superintendent of Bankruptcy for Alberta
- List of Bankruptcy Trustees
- Insolvency Glossary
- Credit Counselling Society Alberta office locations
The Credit Counselling Society is a leading, non-profit credit counselling service provider in Fort McMurray, Alberta with 22 locations across Canada.