Consumer Proposal Medicine Hat, Alberta - Alternatives & Important Things You Need to Know
What is a consumer proposal, and is it my best option?
Filing a Consumer Proposal in Medicine Hat 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.
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 substantially reduce the amount of debt you are required to pay your creditors
- It can be an effective way of consolidating debt in Medicine Hat, 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 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
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 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.
Speak to a Non-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.
Don't Pay Anyone But a Bankruptcy Trustee
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
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 Medicine Hat, Alberta
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 Medicine Hat 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
There are more alternative debt consolidation options and services available than most people are aware of. Find the option that's right for you.
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 Medicine Hat, Alberta with 22 locations across Canada.