Consumer Proposals in Whitchurch-Stouffville
Find out what you need to know and what to look out for.

Consumer Proposal Whitchurch-Stouffville, Ontario – 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 Whitchurch-Stouffville. 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 licensed bankruptcy trustee and it costs approximately $1,500 to file. You pay an initial setup fee to begin, and then, if the arrangement is acceptable to your creditors, you then pay the balance to continue the process. The trustee you work with will additionally hold back 20% of your future payments as an administration fee. For the Consumer Proposal to be legally binding, your creditors who own the majority of your debt must agree to the proposed repayment plan. If they do, you then have to repay the agreed amount over a maximum repayment period of 5 years.

Advantages and Disadvantages of Filing for a Consumer Proposal

Consumer Proposals contain certain advantages and disadvantages. These can include the following:

Advantages

Disadvantages

  • It’s not private. A proposal is filed as a permanent public record and is included on a searchable database
  • It costs more than going bankrupt
  • The Consumer Proposal must be approved by a Judge
  • It can be rejected by your creditors. If they reject it, you may have to offer them more money for to
  • Missing more than 2 payments may mean that you need to file for bankruptcy
  • Not all debts can be included (like secured loans)
  • If you stopped being a student less than 7 years ago, your student loans can’t be included
  • Depending on the type of assets you have, some might need to be sold
  • It may affect future employment opportunities, and the permanent record of your insolvency can put certain professional licenses at risk

There’s a Way Out of Debt with Help

“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 unfortunately become the latest way for an increasing number of debt relief companies and their sales people to take advantage of vulnerable, unsuspecting consumers. Make sure you don’t let this happen to you! Many of these companies are now claiming to offer Consumer Proposals as an effective way to deal with debt. But there’s a problem. In Canada, only a licensed bankruptcy trustee is legally allowed to deal with Consumer Proposals. These debt relief agencies charge thousands of dollars in fees but then refer you to a bankruptcy trustee who then charges his or her own legitimate fees.

How to Keep from Getting Ripped Off

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.

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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.
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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.
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Watch Out for Commission Based Debt Consultants

Ask how the person helping you is compensated. Many people who will seek to advise you on your debts work on commission. Make sure the “solution” they are suggesting is in your best interest – not theirs.
You Probably Have Other Options
See What They Are
You may have an idea of how to resolve your financial situation, but it's very possible that other viable options are available to you - other options that could potentially resolve your situation more quickly, with far more privacy, or with less impact to your credit or career. Every option has pros and cons, but it's worth taking a few minutes to see what your options look like and whether you think you'd like to look into any of them further.

How a Consumer Proposal Impacts Credit

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 paying secured creditors, like those who hold your car loan, outside of your Consumer Proposal, those creditors will report your payments on those debts separately. Creating and maintaining a realistic budget will make it easier to keep these debts paid up to date.

If you are able to show a good payment pattern on a secured debt while you’re making all of your proposal payments, you’ll be that much further ahead afterwards when you want to re-build your credit.

Contact Us for More Information About Filing for a Consumer Proposal in Whitchurch-Stouffville, Ontario

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 Whitchurch-Stouffville at 647-776-0485. You can also email or chat with us online right now.

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Putting Your Interests First

Our goal is to always put consumers first and look out for their best interests in everything we do. One way we do this is through transparency and accountability. We are held accountable to the most rigorous standards in our industry.

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