Consumer Proposal Thunder Bay, Ontario - Alternatives & Important Things You Need to Know
What is a consumer proposal, and could it be the best option for my situation?
Filing a Consumer Proposal in Thunder Bay 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 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
Consumer Proposals contain certain advantages and disadvantages. These can include the following:
- It can reduce the amount of debt you need to repay your creditors by a considerable amount
- It can be a helpful debt consolidation method in Thunder Bay, Ontario 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
- 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
"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
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 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.
Talk with 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 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 enter into a Consumer Proposal, a special notation is placed on your credit report in the public records section. Anyone who you allow to look at your credit report can see the public records section.
Additionally, it is possible that your creditors will report a “7” rating on any debt included in the proposal. This "7" rating means that creditors are receiving your payments through a third party. In this instance the third party would be your trustee. When you send a payment to your trustee, they distribute the agreed upon dollar amounts to all of 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.
Call Us to Learn More About Filing a Consumer Proposal in Thunder Bay, Ontario 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 Thunder Bay 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 Ontario
- List of Bankruptcy Trustees
- Insolvency Glossary
- Credit Counselling Society Ontario office locations
The Credit Counselling Society provides not for profit credit counselling services in Thunder Bay, Ontario and is recognized as one of Canada's leading debt relief services with 22 offices in communities across the country.