Consumer Proposal Edmonton

What is a Consumer Proposal?

A consumer proposal is an alternative option to bankruptcy. If you are having trouble paying all your bills and find yourself in this situation month after month, you just cannot afford to make even the minimum required payments, even though you have a good job and stable income. You do not want to go bankrupt because, with your income, you would be subject to surplus income penalties. You do not want to lose any of your assets, such as a valuable home or car, or simply look for more information about ways to deal with your debts. A Consumer Proposal may just be what you are looking for. Ideal candidates for consumer proposals are those who have a stable income and can afford to make some payments each month. Consumer proposal works best for individuals with debts in excess of $15000.00 to a maximum of $250,000.00 (not including your home mortgage).

Consumer Proposals: A Leading Alternative To Bankruptcy

An increasing number of Canadians are choosing to file a consumer proposal as an alternative to bankruptcy.

Why should I file a consumer proposal?

• You have consumer debt greater than $15,000 but less than $250,000
• You’re able to repay a portion of your debts, but need more time than your creditors are offering
• You want to stop all interest charges, wage garnishments and threats of legal action
• You don’t want to give up your house or any of your belongings to pay off debt

A consumer proposal is just one of the debt help solutions offered by Consumer Debt Consulting in Edmonton. You can speak to us to learn more about all your options, including budgeting, debt consolidation, and bankruptcy.

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Consumer Proposals in Edmonton Can Benefit Both You And Your Creditors

The reason we are seeing more consumer proposals filed in Canada is that they are a more agreeable solution for both parties: the debtor and the creditor. If you choose to file a consumer proposal, you will only have to repay a portion of the debt you owe, and you would not have to give up any of your possessions. Creditors usually accept consumer proposals since this solution allows them to recover a greater portion of the debt owed than other debt-relief options, such as bankruptcy.

By filing a consumer proposal, you will:

• Stop all interest charges from the date the proposal is filed
• Negotiate to repay just a portion of your debt
• Repay your debts in equal monthly payments over a period of three to five years
• Stop all wage garnishments and harassing phone calls from creditors
• Pay off unsecured debts such as credit cards, lines of credit, payday loans and taxes
• Keep all of your assets including your car and your home
• Pay no additional costs or fees beyond your regular monthly payment

Frequently Asked Questions About Consumer Proposals in Edmonton

Consumer proposals are quickly becoming one of the most popular debt relief solutions, and are often used as an alternative to bankruptcy. This page will take a look at some of the key questions you might have about consumer proposals. If you’re wondering how to file a consumer proposal, one of our counsellors can explain every step of the process.

Will I lose everything if I file a consumer proposal?

No, you will not. When you file a consumer proposal, all your assets are protected from your unsecured creditors. If you own a home or a car, you will need to continue to make payments on your mortgage or car loan in order to keep them, as these debts cannot be included in a consumer proposal.

What’s the difference between a consumer proposal and bankruptcy?

While both a consumer proposal and bankruptcy can give you a fresh financial start, there are a few key differences, as follows:

1. When you file a consumer proposal, you cannot have more than $250,000 in debt. There is no maximum when you file for bankruptcy.
2. With a consumer proposal, you will pay the same amount every month; in bankruptcy, the monthly amount you pay can vary based on your ‘surplus income.’
3. Most importantly, when you file a consumer proposal, you will not lose any of your assets. By filing bankruptcy, some of your assets will likely be sold in order to repay a portion of the debt owed to your creditors.

What fees do I have to pay when I file a consumer proposal?

With a consumer proposal, you only make one equal monthly payment every month.

What kinds of debt are included in a consumer proposal?

Any form of ‘unsecured’ debt (debt that is not backed, or secured, by an asset you own—like how a mortgage loan is secured by your house) can be included in a consumer proposal. Types of unsecured debt include:

• Credit cards
• Lines of credit
• Personal loans
• Payday loans
• Income taxes

Can I pay off student loans with a consumer proposal?

A student loan can only be included in a consumer proposal if you have been out of school for longer than seven years. Otherwise, you will still be responsible for student loan payments if you file a consumer proposal.

How does a consumer proposal affect my mortgage (or car loan)?

Unfortunately, you cannot use a consumer proposal to reduce your mortgage or auto-loan debt obligations. These are considered ‘secured’ debts, meaning your creditors can repossess your home or car if you are unable to make payments. If you file a consumer proposal to pay off your unsecured debts, you will need to continue to make payments on your mortgage and/or car loan, or else you would run the risk of having your car and/or home repossessed. If your car and/or mortgage payments are in good standing, however, they will not be affected by a consumer proposal. All of your possessions and belongings, including your car and home, are protected from your creditors when you file a consumer proposal. And by using a consumer proposal to consolidate and pay off all of your unsecured debts, you might find it easier to continue making car and mortgage payments. Your LIT will work with you to determine a budget that allows you to meet all of your obligations.

Consumer Proposal Edmonton

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What are the terms of a consumer proposal?

If you choose to file a consumer proposal, there are a few terms that you’ll agree to. Once your proposal has been negotiated with your creditors to repay a portion of your debt, you would enter into a proposal with a fixed monthly payment over a set period of time—usually between three and five years. You would make that same monthly payment every month for the duration of the proposal. 

How long does a consumer proposal last?

While the exact length would depend on your individual circumstances, a consumer proposal cannot last more than five years.

What happens to my credit score if I file a consumer proposal?

When you file a consumer proposal, you will receive an R7 rating, which shows you have made a settlement with your creditors. This rating will stay on your credit report for three years after your proposal has been completed.

Will my spouse be affected if I file a consumer proposal?

If you file a consumer proposal, it will not go on your spouse’s credit report. However, if you have joint debts, your spouse could be held responsible for the entire debt after you file a consumer proposal.

What happens if I co-signed a loan with someone?

If you file a consumer proposal (or file for bankruptcy), your co-signer will be responsible for repaying these debts; the debt will not be eliminated unless you file a joint consumer proposal.

What happens to my credit cards when I file a consumer proposal?

When you file a consumer proposal, you will need to hand over your credit cards to your LIT. You won’t be able to apply for a new credit card while you’re making payments on your proposal—unless it’s a prepaid or secured credit card.

Will a consumer proposal stop collections agencies from calling me?

Yes. Once your consumer proposal has been filled, collections agencies are not allowed to contact you.

Will any wage garnishments that I have stopped?

Yes. Once you file a consumer proposal, all legal action against you, including wage garnishments, will cease.