What Happens After Filing a Consumer Proposal?

Are you wondering about what happens after filing a consumer proposal? This article provides an in-depth explanation of the process and what to expect.

Introduction

A consumer proposal is a legal agreement formulated by a licensed insolvency trustee between you and your creditors. It offers a plan to pay back a portion of your unsecured debts, thus providing a way to avoid bankruptcy. This guide will explore the steps and processes that occur after filing a consumer proposal.

Completion of a Consumer Proposal

Upon fulfilling the terms of your consumer proposal, you’ll receive a Certificate of Full Performance, which signifies the official end of your obligations to repay the remaining balance of your debt. Your licensed insolvency trustee also gets discharged from the consumer proposal process after they meet all their legal requirements. These include reviewing and admitting creditor claims, compiling a final accounting of all money received, and distributing the final payments to eligible creditors.

Important Documents to Retain

It’s crucial to keep a record of all the documents you receive during the consumer proposal process. These include:

  • Notice of Consumer Proposal: This document contains the official start date of your proposal, the settlement offer made to your creditors, and a list of your creditors.
  • Certificate of Full Performance: This certificate proves that you’ve successfully completed your consumer proposal and are free from the remainder of the debt that was forgiven under the proposal settlement.
  • Final Statement of Receipts and Disbursements: This is the final document you’ll receive which contains key dates, a finalized list of creditors dealt with, and how much money each received.

If you lose any of these documents, you can contact your trustee directly or the Office of the Superintendent of Bankruptcy to get copies.

Credit Score and History Post-Consumer Proposal

A consumer proposal will appear on your credit history report for three years after the date you finish your proposal or six years from the date your proposal started, whichever is sooner. As soon as your consumer proposal is completed, you can start working on improving your credit report. By paying all your bills on time and using new credit responsibly, you can rebuild your credit score.

Correcting Errors on Your Credit Reports

It’s not uncommon to find errors on your credit history after the completion of your consumer proposal. One common error is finding that one of your creditors is still reporting a balance owing, even though it has been dealt with under the proposal. If you find any inaccuracies, you can fill out the Credit Investigation Request Form to request corrections from Equifax and TransUnion.

Acquiring Credit After a Consumer Proposal

While it’s possible to get new credit immediately after or even during your consumer proposal, it’s important to be satisfied with the terms of borrowing. Initially, you may not qualify for the best rates. If this happens, consider if the credit is something you really need, or if you can wait until it will cost less to borrow.

Future Credit Prospects

Here’s a brief overview of your prospects for different types of credit after a consumer proposal:

  • Mortgage: Standard lenders may grant you a new mortgage if it has been two years since you finished your consumer proposal.
  • Car Loan: Mainstream lenders may grant you a vehicle loan or lease within a year or two of finishing your consumer proposal.
  • Credit Card: Many people obtain a secured credit card before their consumer proposal is finished.

Remember, in addition to your credit score, lenders will also evaluate your income and savings when considering your credit application.

Conclusion

Filing a consumer proposal may seem daunting, but it can be a vital step towards financial recovery. It may even enhance your future credit prospects by reducing your debt burden.

Related Information

  1. How Much Debt will a Consumer Proposal Eliminate?
  2. 10 Facts You Should Know About Consumer Proposals
  3. What is a Licensed Insolvency Trustee?

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