Consumer Proposal Slave Lake, Alberta - Straight Facts and Other Options
What is a consumer proposal, and could it be the best option for my situation?
If you are looking to consolidate your debts, one option available is to file a Consumer Proposal in Slave Lake. 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 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 Slave Lake, 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
"I had just come to the point where I had given up hope – that there’s no way I could ever repay my debt. A friend of mine suggested I reach out, and I thought I’d get some condescending person on the phone lecture me about money, but my counsellor was the most compassionate, caring person who became sort of my own personal cheerleader."
- Charis, 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 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
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.
Only Pay a Trustee for Consumer Proposal Services
Never pay money to anyone for Consumer Proposal services except a licensed bankruptcy trustee. According to the law, only a licensed trustee is allowed to do the work and charge for Consumer Proposals.
How a Consumer Proposal Impacts Credit
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 Slave Lake, 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 Slave Lake at 1-888-527-8999. You can also email or chat with us online right now.
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- The Office of the Superintendent of Bankruptcy for Alberta
- List of Licensed Bankruptcy Trustees
- Glossary of Terms Used in Insolvency
- Credit Counselling Society Alberta office locations
The Credit Counselling Society is a leading, non-profit credit counselling service provider in Slave Lake, Alberta with 22 locations across Canada.