Money problems can hit any of us at any time. The stress of overwhelming debt can feel never-ending, but there’s a lifeline called a Consumer Proposal. With one of these, you can bring your debt down without having to worry about adding more. But what is it, how can it help, and can you still use a credit card when you have one?
What’s a Consumer Proposal?
A Consumer Proposal is like a superhero move for your finances. It’s a legally binding agreement between you and your debt holders, crafted to help you when your debts feel like an avalanche. This plan lets you work out a deal that reduces your debt by up to 80% and creates a manageable payment plan, all while protecting your assets.
Why should you consider a Consumer Proposal?
Well, getting a Consumer Proposal comes with a lot of perks that can make your financial life a whole lot easier:
1. Debt reduction
Imagine turning a mountain of debt into a molehill. A Consumer Proposal can help you reduce your overall debt by up to 80% of what you owe.
2. Flexible payments
Say goodbye to those sky-high interest rates. With a Consumer Proposal, you get to work out a payment plan that suits your budget, completely interest-free
3. One-stop debt shop
Managing multiple debts can feel like herding cats. But with a Consumer Proposal, you consolidate all your debts into one simple, monthly payment. It’s like a streamlined debt management system that saves you time and headaches.
4. Choose your timeline
You can pay off your debts over a period of five years, or if you’re feeling extra ambitious, pay it off sooner.
5. We’re in this together
We’re not just here to set up the deal and disappear. We’re your partners on this financial adventure. We’ll walk with you until your last payment.
Can you still get a credit card while doing a Consumer Proposal?
Now, because a Consumer Proposal rounds up all your debt — including your existing credit cards — you might have heard that you can’t use a credit card at all. In fact, when they ask you to cut up your current card, you’re probably asking yourself, “Can I still get a credit card while dealing with all this? What if I need money in an emergency?” Yes, you can! And you have two options:
1. Secured credit cards
These cards can be a helpful stepping stone for anyone looking to rebuild their credit. When you apply for a secured credit card, you’re typically required to make a cash deposit as collateral. The amount of the security deposit is often equal to or slightly greater than the card’s credit limit and is held by the issuing bank as security in case you fail to make payments. When it comes to secured credit cards, your credit limit is determined by the amount of your security deposit. For example, if you provide a $500 security deposit, your credit limit will typically be around $500.
2. Credit-building credit cards
These cards are specially designed to provide a second chance for individuals wanting to improve their credit histories. While these cards might have lower credit limits and slightly higher interest rates, they are a path to a brighter financial future. When you use them responsibly, they become a tool for rebuilding your credit history. It’s like hitting the refresh button on your financial journey.
Regardless of which card you choose, use it responsibly. Make small buys and pay off the balance every month. One of the best ways to improve your credit score while spending responsibly is to pay off your bills on your credit card. Since you have to pay these monthly — and since it’s something you’re probably budgeting for – putting them on your credit card and paying it off each month means you won’t be adding to your debt, you’ll also be improving your credit score.
The bottom line
A Consumer Proposal is your ticket to financial stability. With Farber’s friendly experts by your side, we can negotiate a manageable debt repayment plan and, eventually, debt freedom. And yes, getting a credit card during and after a Consumer Proposal is totally doable. Just use it wisely!
So, if you’re thinking about getting a Consumer Proposal to get your finances back on track, connect with us today for your free consultation.
FAQs
If you have ongoing debt obligations, like your existing mortgage, continue to make payments on time and in full. Consistent on-time payments will positively impact your credit score, which can help you qualify for a credit card soon after you complete the consumer proposal.
Can you still have a credit card with a consumer proposal? ›
A Consumer Proposal is your ticket to financial stability. With Farber's friendly experts by your side, we can negotiate a manageable debt repayment plan and, eventually, debt freedom. And yes, getting a credit card during and after a Consumer Proposal is totally doable.
Does a consumer proposal show up on a credit check? ›
If you file a consumer proposal, your creditors will report to the credit bureau that your debt was included in a proposal. Sometimes the creditors may make a mistake. They may say the debt was included in a bankruptcy.
Do creditors usually accept consumer proposal? ›
Consumer proposals are usually accepted as filed and negotiations can take place between you and your creditors with the help of your Licensed Insolvency Trustee to gain a positive vote.
How can I build credit fast after consumer proposal? ›
In order to rebuild your credit after a bankruptcy or a consumer proposal, it's vital that you start establishing a reliable payment history. That means paying all bills on time, including your credit card, utilities, cell phone, etc.
What is the best credit card during a consumer proposal? ›
A secured credit card is one option for getting a credit card with consumer proposals. A secured credit card works like a regular credit card but is backed by a cash deposit you make to the lender.
Can you get an unsecured credit card after a consumer proposal? ›
Short Answer. Generally during the process you can apply for a secured credit card, and will work your way back to an unsecured card after the proposal. Some creditors will give you a card shortly after you complete the proposal.
How long after a consumer proposal can I get a credit card? ›
Mainstream credit cards at best rates may be available within one year of your Consumer Proposal being completed. In addition to your credit score, lenders will also evaluate your income and savings when considering your credit application!
How long does it take to build credit after a consumer proposal? ›
After paying off debt you consolidated in a Consumer Proposal, or having your debt forgiven under personal bankruptcy, you can get a new mortgage, vehicle financing, credit card, bank loan, etc. In as little as two to three years you may even have a better credit rating than before you started!
How badly does a consumer proposal affect your credit? ›
A consumer proposal will affect your credit rating, but less drastically than a Bankruptcy. While both options make it less likely that you will be able to obtain credit a Consumer Proposal will only stay on your record for three years after your last payment.
Disadvantages of a Consumer Proposal:
A proposal will usually take longer to complete than a bankruptcy. Lowering your monthly payment means longer time paying back, however, if your situation improves, you CAN pay off a proposal early. Credit rating is still affected – A Consumer Proposal DOES affect your credit.
How much debt do you need for a consumer proposal? ›
To file a consumer proposal, which is a debt option more drastic than debt settlement but only slightly better than bankruptcy, you must owe at least $1,000 in unsecured debt. The maximum that you can owe as a single person and still qualify for a consumer proposal is $250,000.
Do banks accept consumer proposals? ›
They can say 'yes' or 'no' to the proposal. If at least half of your creditors vote 'yes,' then the proposal is deemed approved. Banks have 45 days from the date you file the proposal to vote. Banks also have the option to ask for a certain amount of the debt owed to them.
Can I get a second consumer proposal? ›
Fortunately, the number of consumer proposals you can file in a lifetime is unlimited. But it would be best if you were entirely sure it is the right solution for your financial situation. The following article looks at the benefits of consumer proposals and when it makes sense to file a second one.
Do most consumer proposals get accepted? ›
When a proposal passes, it forces all general unsecured creditors(with minor exceptions)to settle their claims against the debtor for the amount offered in the proposal. Consumer proposals get accepted in our office “eventually” at a rate of 95% or better.
Is consumer proposal worth it? ›
Consumer proposals can provide significant benefits in managing overwhelming debt, making them worth considering. Here are key reasons to explore a consumer proposal: Debt Relief: Consumer proposals offer a structured way to regain control of your finances, preventing debt from snowballing with fees and penalties.
What happens to your credit when you do a consumer proposal? ›
A consumer proposal will affect your credit rating, but less drastically than a Bankruptcy. While both options make it less likely that you will be able to obtain credit a Consumer Proposal will only stay on your record for three years after your last payment.
What Cannot be included in a consumer proposal? ›
Debts that cannot be included in a consumer proposal
Secured debts like your mortgage or car loan. Support payments or alimony obligations. Court fines and penalties including parking tickets. Debts due to fraud.
Can you open a bank account after consumer proposal? ›
The other must have your name and address. No minimum deposit is required to open an account. A financial institution cannot refuse to open a bank account for you because you are Bankrupt or have a Consumer Proposal.
