Consumer Proposals can be a great option for individuals who want to consolidate and reduce their debts.If you have some ability to make payments on your debts, but you are unable to repay the full amount then a Consumer Proposal can be an affordable alternative to traditional debt consolidation.
The four main steps to filing a Consumer Proposal in BC are outlined here:
- Meet with a Licensed Insolvency Trustee to assess your situation and review all the options available to resolve your debts.
Consumer Proposals are tailored to each person’s unique situation; your Sands & Associates Trustee will help you work out a Consumer Proposal payment plan that is suitable for your income, family size, and other relevant factors such as the amount of debt you are carrying.
Use our Debt Options Calculatorto get a general comparison of four key debt options.
There are many companies who have “programs” which may sound very similar to a Consumer Proposal – unfortunately they do not offer the same protection as a Consumer Proposal and they often come with high up-front fees.Be sure that you are meeting with a government-Licensed Insolvency Trustee when it comes to Consumer Proposals.
- When you’re ready to file your Consumer Proposal, you’ll meet with your Licensed Insolvency Trustee to sign the official Consumer Proposal documents. Once complete, these will be officially registered and sent to your creditors, so they can consider your proposal.
Your creditors have 45 days to consider your Consumer Proposal.If more than 50% of your creditors (by dollar value) vote to accept your proposal, then the Consumer Proposal will be legally binding on all the creditors, even if some have not agreed.
Consumer Proposals are nearly always accepted by creditors, as they will provide a better return on the debt than if you decided to file a personal bankruptcy.They also give all parties a clear start and end date.
When your Consumer Proposal is filed, this is when interest becomes frozen, and collection action against you must stop immediately. Your creditors are no longer permitted to seek payment from you or to continue further collection activity – this includes creditors such as Canada Revenue Agency and Student Loans.
- Complete the terms of your Consumer Proposal. Once your Consumer Proposal has been accepted, you’ll begin working to complete the terms offered; this is usually by making monthly payments to the Licensed Insolvency Trustee, for distribution to your creditors.
You’ll also have two financial counselling sessions, which will focus on credit rebuilding and good financial management. The sessions are private one-on-one meetings held at the Trustee’s office.
You can pay off your Consumer Proposal early or make extra payments towards the settlement amount at any time with no penalty.
- When your Consumer Proposal terms are complete (ie. the last payment is made) you’ll receive an official Certificate of Full Performance. You are now debt-free and have achieved a financial fresh start!
The main goal of a Consumer Proposal is to settle the amounts owed to your creditors without over-burdening you with unmanageable payments and interest and allowing you to avoid filing for bankruptcy.Consumer Proposal terms can and do vary greatly depending on a person’s unique set of needs and circ*mstances.The best way to find out if a Consumer Proposal will work for you is to meet with a Licensed Insolvency Trustee.
Request a consultation with Sands & Associates and get started today!
FAQs
Often, they will make you wait for a considerable amount of time, usually two years, after being discharged before they will even consider you for a loan. However, there are some subprime lenders who offer loans to those who are in consumer proposals, but it is usually to help them pay off the proposal early.
Do creditors usually accept consumer proposals? ›
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.
What is the downside of a consumer proposal? ›
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 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!
Will my credit score go up after a consumer proposal? ›
Filing a consumer proposal may hurt your credit scores, but the damage likely isn't permanent. It's possible to recover your score by practicing good financial habits, including paying bills on time and sticking to a budget.
What happens after a consumer proposal is completed? ›
FAQ Related to After a Consumer Proposal Is Paid Off
Once you have successfully completed and paid off the Consumer Proposal, it will be removed from your credit report three years after the completion date or six years from the filing date, whichever occurs first.
What is the success rate of a consumer proposal? ›
A consumer proposal is a legal agreement that enables you to get out of debt for less than the full amount you owe. Consumer proposals filed by Remolino & Associates have a success rate of 96% and reduce your unsecured debts by up to 75%.
What cannot be included in a consumer proposal? ›
Debts Not Eligible for Inclusion
Secured Debts: Secured debts are backed by collateral, such as a home or car. Examples include mortgages and car loans. These debts typically are not included in a Consumer Proposal, which means you can keep the collateral asset as long as you continue to make the payments.
Why would a creditor reject a consumer proposal? ›
Here are the key reasons a consumer proposal might get rejected: You are offering insufficient funds. You are offering an unsuitable repayment schedule for your creditors. You contributed to your financial situation by an unjustifiable extravagance in living expenses or by neglecting business matters.
Can you keep your house with a consumer proposal? ›
Unlike bankruptcy, consumer proposals allow you to keep assets including your home, car, tax refunds, and RRSPs. This makes filing a consumer proposal a very popular bankruptcy alternative in Canada. Debt relief is not about what you have to give up – it is about stabilizing your finances for a secure, fresh future.
If you miss more than three (3) payments, the consumer proposal collapses and annulled by the court. Your creditors can immediately apply to the court to have your wages garnished and interest charges are applied to your debts all the way back from the day you filed.
Are consumer proposals worth it? ›
Consumer Proposals Mean Lower Monthly Payments
In a consumer proposal, you negotiate to repay only a portion of your debt. It is not unusual to see debts reduced by as much as 70% of the original amount owed. A consumer proposal is one of the best and safest debt consolidation options available.
How much debt do you need for a consumer proposal? ›
Debt Required to File 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.
Can you back out of a consumer proposal? ›
A consumer proposal can be withdrawn within 60 days of filing and before the court approves it. This 60-day window is based on 45 days for the creditors to vote plus 15 days for the court to approve the proposal.
What is the best way to build credit while on a consumer proposal? ›
Make payments in full and on time
Those who file a consumer proposal can keep a credit card with a zero balance at the date of filing. This will help re-establish credit during the consumer proposal. Many people worry that filing a consumer proposal will drop their credit card limit, this is not automatically the case.
What is the fastest way to build credit after a consumer proposal? ›
Build A Positive Payment History
A history of timely payments will help build very good credit, which is why it's crucial that you meet all bill payment due dates every billing cycle. If you have access to credit products after a consumer proposal, use them responsibly to build a positive credit history.
Can you add another debt to a consumer proposal after it has started? ›
Any change to a proposal once it has been accepted can cause significant problems. Any change which creates material change in the proposal can require an amendment which your creditors will have to vote on. The creditors could reject the amended proposal.
Can you open a bank account after consumer proposal? ›
One must have your name and date of birth. 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.
