The Process of Filing a Consumer Proposal

The proposal starts with an initial fee, followed by creditor acceptance. If accepted, you will pay the remaining balance to proceed. Additionally, the trustee will retain 20% of your future payments as a fee for administering your Consumer Proposal.

Note: For the proposal to be legally binding, the majority of your creditors must agree to its terms. Once in effect, the agreed amount is repaid over a maximum of 5 years.

Advantages of a Consumer Proposal in Calgary

A Consumer Proposal can be an effective method of debt consolidation in Calgary, Alberta if:

1. You can’t afford to repay all of your debt.
2. You have a stable income.
3. You have sufficient budget to make monthly payments.

It is an excellent option if you don’t qualify for a debt consolidation loan or if you have debts that can’t be included in a debt management program. It can also be one of the final steps to avoid bankruptcy.

Disadvantages of a Consumer Proposal

While a Consumer Proposal can provide financial relief, it’s crucial to understand the potential drawbacks:

• It’s a public record and searchable in a database.
• It’s more costly than declaring bankruptcy.
• Creditors can reject the Consumer Proposal.
• Missed payments could lead to bankruptcy.
• Student loans less than 7 years old can’t be included.
• Secured debts aren’t included.
• Some assets may need to be sold.
• It can affect professional licenses and future employment opportunities.

Avoiding Debt Relief Scams

It’s critical to be cautious of for-profit companies claiming to offer Consumer Proposals as a simple debt solution. To avoid scams, follow these guidelines:

• Consult a non-profit Credit Counsellor about your financial situation.
• Only pay for Consumer Proposal services to a licensed bankruptcy trustee.
• Verify how the person assisting you is compensated.

Impact of a Consumer Proposal on Credit

A Consumer Proposal affects your credit report, with a special notation placed in the public records section. Creditors may report a “7” rating on any debt included in the proposal, indicating that they are receiving your payments through a third party.

Consumer Proposal Alternatives in Calgary, Alberta

While a Consumer Proposal can be beneficial for some, it’s not the best option for everyone. Alternatives include debt consolidation options and debt settlements.

Orderly Payment of Debt

The Orderly Payment of Debt (OPD) program, for example, consolidates your loans and pays your unsecured creditors over three or more years at an interest rate of 5% per annum.

Personal Bankruptcy

Personal bankruptcy is another option, and a thorough review of its advantages and disadvantages is advised. Remember, the goal is to alleviate your financial burdens and lay the groundwork for financial stability.

Final Thoughts

Finding the right debt solution in Calgary, Alberta can seem overwhelming, but the right information and guidance can make the process easier. It is essential to seek advice from financial professionals, explore all options, and choose the one that aligns best with your financial situation. A Consumer Proposal in Calgary might be a good option, but it should be explored carefully, considering the possible advantages and disadvantages.