Consumer Proposal High River, Alberta - Alternatives & Important Things You Need to Know
What is a consumer proposal, and is it the best option for me?
If you are looking to consolidate your debts, one option available is to file a Consumer Proposal in High River. 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 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 definitely advantages and disadvantages to filing a Consumer Proposal. Here are some that are important to be aware of:
- It can significantly reduce the amount of debt you have to repay your creditors
- It can be an effective method of debt consolidation in High River, Alberta 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
- 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
"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
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.
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.
Speak to a Non-Profit Credit Counsellor
Speak to an accredited, non-profit Credit Counsellor about your financial situation first. They will go over your whole situation with you and take the time to help you explore and understand all your options to resolve your debt problems.
Only Pay a Trustee for Consumer Proposal Services
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.
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 High River, Alberta 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 High River at 403-263-9905. 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.
Find Out How a Debt Management Program Works
Learn how a Debt Management Program can consolidate your payments, eliminate interest rates, and get you out of debt and back on track.
- The Office of the Superintendent of Bankruptcy for Alberta
- List of Licensed Bankruptcy Trustees
- Insolvency Terms & What They Mean
- Credit Counselling Society Alberta office locations
The Credit Counselling Society provides not for profit credit counselling services in High River, Alberta and is recognized as one of Canada's leading debt relief services with 22 offices in communities across the country.