Consumer Proposal St. Albert

Pros & Cons of Filing a Consumer Proposal in St. Albert

Like any financial decision, Consumer Proposals have their advantages and disadvantages.

Advantages

1. It can significantly reduce the debt you need to repay your creditors.
2. It can be a useful debt consolidation method in St. Albert if:
   • You cannot afford to pay back all the debt you owe.
   • You have a steady income source.
   • Your budget has enough money for you to make monthly payments.
3. It can be a viable option if:
   • You aren’t eligible for a consolidation loan.
   • You have debts (like high government debt) which need to stay outside of a debt management program.
4. It puts active collection of student loan payments on hold.
5. It is one of the final ways to avoid bankruptcy.

Disadvantages

1. It’s not a private method. A proposal is a permanent public record included on a searchable database.
2. It’s more expensive than declaring bankruptcy.
3. It requires court approval.
4. Creditors can reject the Consumer Proposal – if they do, you may have to offer them additional funds; otherwise, your proposal will not proceed.
5. If you miss more than 2 payments, you may need to file for bankruptcy.
6. Student loans can’t be included if they are less than 7 years old.
7. Secured debts aren’t included.
8. Some assets (such as your home, vehicles, or investments) may need to be sold.
9. The permanent record of your insolvency can put certain professional licenses at risk and may also affect future employment opportunities.

Finding a Way Out of Debt with Aid

Overcoming debt can be an arduous task that may feel hopeless at times. However, with the right guidance and advice, it is possible to navigate your way out of debt.

A former client, Charis, shared her experience, “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.“

Avoiding the Debt Trap

Unfortunately, Consumer Proposals have become a means for some for-profit companies to exploit vulnerable consumers. These debt relief companies charge exorbitant fees, claiming to offer Consumer Proposals as an easy way out of debt. The catch is that only a licensed bankruptcy trustee can file a Consumer Proposal’s paperwork.

How to Prevent Being Defrauded

1. Speak to an accredited, non-profit Credit Counsellor about your financial situation first. They will help you explore and understand all your options to resolve your debt problems.
2. Never pay money to anyone for Consumer Proposal services except a licensed bankruptcy trustee.
3. Ask how the person helping you is compensated. Many people advising you on your debts work on commission. Ensure the “solution” they are suggesting is in your best interest.

Impact of a Consumer Proposal on Credit

Once you initiate a Consumer Proposal, a special notation is placed on your credit report in the public records section. Additionally, your creditors may report a “7” rating on any debt included in the proposal, which means that creditors are receiving your payments through a third party, i.e., your trustee. If you are making payments to secured creditors, like for a car loan, outside of your Consumer Proposal, those creditors will report on those debts separately.

Availing More Info About Filing for a Consumer Proposal in St. Albert, Alberta

Between financial difficulty and bankruptcy, there can be many options. While a Consumer Proposal may be a good option for some, it isn’t the best option for everyone. To find out what options you have, call one of our professionally certified Credit Counsellors today.