What is a Consumer Proposal?

What is a Consumer Proposal?

A consumer proposal allows you to pay off your unsecured debts at an affordable monthly rate. It’s helpful since you’ll often only have to pay off a portion of what you owe.

A few key benefits of a consumer proposal

  • A consumer proposal often reduces overall debt owing.
  • A consumer proposal stops collection action.
  • Your assets remain in your possession (provided that you continue the usual monthly payment ie: continue paying your mortgage)
  • A consumer proposal stops all wage garnishment
  • Your repayments are typically at 0% interest.
  • You can repay with no penalties

 

how a consumer proposal affects you

It will impact your credit rating thus affect your creditor’s ability to lend to you.

If your credit is already bad and you’re drowning in debt then this is likely a minor issue.

In addition, the proposal will be reported on your credit report as an R7 for 3 years from the date it is paid in full. An R7 basically means you’ve taken advantage of a debt repayment program provided by the government for interest relief & debt reduction. So during this period the creditors may choose not do business with you.

You must decide if the impact on your credit is worth getting out of debt. The benefit of a proposal is that it is a simple & affordable repayment plan to start.

How to Do a Consumer Proposal

To do a consumer proposal you’ll need to provide all the necessary details to your debt counselor & trustee in order to file for interest relief & debt reduction.

  • pay stubs, work & personal information
  • all unsecured debts need to be included (credit cards, loans, student loans older than 7 years, collections debts, negative equity owing from a car, home, etc)
  • any relevant assets (car, house, property under your name, summer homes, etc)
  • transfer of property in the last 5 years
  • joined assets or debts
  • do a summary questionnaire

Retainer Costs

“To get the things you never had before, you must do things you’re never done before.”

– Collin Sprake, Entrepreneur & President of Make Your Mark

Once your details are provided then you will need to pay for your retainer (for the work on your file) to the appropriate party. Yes, there’s a cost to go insolvent. Retainers pay for 50 hours of legal paperwork that will reduce your overall debt load and make your life worry free again. It is important to be┬árealistic about continuing what you’re doing now and see if debt reduction & interest relief will benefit you.

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