Consumer Proposals In Vancouver

 

You likely have many questions that come to mind when you’re in a tight financial spot. The good news is that you have options about how to proceed based on your situation. Find out what you should know and what to look for when considering Consumer Proposals in Vancouver. You can learn more about what a consumer proposal is and your best option when dealing with debt and trying to avoid bankruptcy.

What to Know

There are some vital details you’ll want to know when it comes to learning more about Consumer Proposals in Vancouver. You have this option if you’re looking to consolidate your debts.  It’s a legal process under the Bankruptcy and Insolvency Act between you and your creditors to repay part of what you owe. Your income and what you own will be taken into account when trying to figure out the amount that you will need to repay.

You can expect to pay around 1,500 dollars when working with a bankruptcy trustee who can set up your consumer proposal. Expect to pay an initial fee for getting it set up and then to pay the remaining balance that you owe if the creditors accept your offer. There is also a 20 percent administration fee for consumer proposals that will be enforced on your future payments. It’s not legally binding until the creditors who you owe money to agree to the arrangement. If accepted, you’ll be required to repay the confirmed amount over a maximum 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 Vancouver, BC if:
    • You cannot afford to pay back all the debt you owe.
    • You have steady income.
    • Your budget has enough money in it for you to make monthly payments.
  • Has the potential to be a good option if:
  • Will put active collection of student loan payments on hold.
  • It is one of the final ways of avoiding 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).

How A Consumer Proposal Impacts Your Credit

You’ll see a special notation on your credit report as soon as you enter into a consumer proposal. It’ll be in the public records section for anyone who you allow to view your credit report to see. Therefore, remember that if you do proceed, it won’t be a private matter.

You may also notice that your creditors report a “7” rating on the debt that’s included in the proposal. The “7” rating indicates that creditors are receiving your payments through a third party, which in your case is your trustee. It’s a way of communicating what’s actually happening behind the scenes. For instance, you’ll pay your trustee the amount you owe, and then they will distribute the agreed-upon dollar amounts to your creditors after all the applicable fees are paid.

Secured debts you may also be paying such as a car loan will be separate from your consumer proposal. Creditors will report these payments you’re making on these debts apart from this agreement. It may be useful to create and follow a budget so that you can keep up with paying your debts and not falling behind.

Focus on showing a consistent payment pattern on your secured debt while you’re also taking care of the money you owe with your consumer proposal agreement. It’ll help you to rebuild your credit over time if you’re staying on track.

Getting in Touch

In Canada, only a licensed bankruptcy trustee is legally allowed to deal with Consumer Proposals. Contact us today for more information about filing for a Consumer Proposal in Vancouver, BC. You have options when it comes to dealing with financial difficulty and bankruptcy, and a consumer proposal may be the right choice for you.