Consumer Proposals In Red Deer

 

Realizing you’re in a lot of debt is not an ideal situation. You likely have a lot of questions about what your options are for getting out of it and what may be the best solutions for you. One idea is to learn more about consumer proposals regarding how they work and what to watch out for.

Take a moment to understand better the process of filing Consumer Proposals in Red Deer and what it all entails. You never know, it could be the best option for your situation.

Information about Consumer Proposals

One debt repayment option that you should strongly consider is filing Consumer Proposals in Red Deer. It may allow you to consolidate your debts if you meet the criteria. It is a legal process between you and your creditors to repay a portion of what you owe, and it is governed by the Bankruptcy and Insolvency Act. In this case, the amount of debt you’ll be required to repay when choosing a consumer proposal will depend upon your income and what you own.

Only a bankruptcy trustee can set up a consumer proposal, and you can anticipate spending around 1,500 dollars. There’s going to be an initial setup fee, and then you’ll pay the balance to proceed if your creditors accept the offer. As part of the consumer proposal administration fee, your trustee will keep 20 percent of your future payments. It’s only legally binding if the majority of the creditors who you owe money to accept the arrangement you’re proposing. If all goes well, you’ll commit to repaying the agreed-upon amount over a maximum term of five years.

Advantages & Disadvantages of Filing for A Consumer Proposal

There are a few advantages and disadvantages you should be aware that consumer proposals contain. Such as the following:

Advantages

  • It can reduce the amount of debt you need to repay your creditors by a considerable amount.
  • It can be a helpful debt consolidation method in Red Deer, Alberta if:
    • You can’t afford to repay all of what you owe
    • You have stable income
    • You have enough money in your budget to make monthly payments
  • It will pause active collection on student loan payments
  • Can be a good option if:
  • It is one of the last ways to avoid bankruptcy

Disadvantages

  • It’s not a private matter. A Consumer Proposal is filed as a permanent public record and is included on a searchable database.
  • It costs more than filing for bankruptcy.
  • The Court must approve it.
  • Creditors can choose to reject the proposal. If they do, you may need to offer them additional funds to convince them to proceed.
  • You might need to sell some of your assets (such as a vehicle, your home, or investments).

The Impact on Your Credit

A soon as you start making payments toward the consumer proposal a note will be included in the public records section of your credit report. It’ll state that you filed a proposal and anyone who you allow to view your credit report will see this information.

You may also see that your creditors report a “7” rating on the debt that’s included in your proposal. The “7” rating means that they’re being paid the money through a third party, which is your trustee. After all fees are taken care of, your monthly payment will be sent to your creditors.

Secured debt payments like toward a vehicle loan will remain separate from the proposal. It’s a wise idea to follow a budget so that you can stay on track with all your payments.

Staying on track and making timely payments will help to rebuild your credit score over time. A good payment history will allow you to obtain a better score and at a quicker rate.

Taking Action

If you’re interested in learning more about Consumer Proposals in Red Deer, then it’s best to contact the experts at Bankruptcy Canada. We’re here to walk you through your next steps and to answer any questions that you still have. It’s important to remember that you have options for dealing with financial difficulty and that a consumer proposal may be one way to avoid bankruptcy. Get in touch so that we can discuss your choices and point you in the right direction for finding financial freedom in the future.