Consumer Proposals can be a great option for individuals who want to restructure their debts. In fact, a Consumer Proposal is the most powerful, yet least well-known, debt resolution option other than personal bankruptcy. If you have some ability to make payments on your debts, but you are unable to pay the full amount, then a Consumer Proposal can be a great tool to get you back on track.
Here’s an overview of how it works:
Step 1: Meet with a licensed Trustee
Contact a Trustee in your area to arrange a free in-person consultation to discuss your needs and options. There are many companies who have “programs” which may sound very similar to a Consumer Proposal – unfortunately they do not offer the same protection as a Consumer Proposal, and they often come with high up-front fees. Be absolutely sure that you are meeting with a government-licensed Trustee when it comes to Consumer Proposals.
Step 2: Sign your Consumer Proposal
Your Trustee will work with you to come up with a Consumer Proposal that is appropriate for the amount of debts you have, as well as your household budget. Once the Consumer Proposal is signed, the Trustee will contact your creditors and advise them of the proposal. At this point, your creditors are no longer permitted to seek payment from you, or to continue further collection activity – this includes creditors such as Canada Revenue Agency and Student Loans.
Step 3: Complete the Consumer Proposal terms
Once your Consumer Proposal has been accepted by the creditors, you will commence fulfilling the terms you have offered. Monthly payments are most common, and there are also two credit counselling sessions that you’ll attend with the Trustee. After all the terms are completed you will receive an official certificate showing that your Consumer Proposal has been fully performed.
Step 4: Rebuild your Credit
Your Consumer Proposal will be reflected on your credit report for two years after it is complete, although it is still possible to receive credit while your proposal is ongoing. We do suggest that after your proposal is finished, that you obtain a copy of your credit report to keep it up to date, ensuring there are no delays should you choose to seek credit again in future.
The main goal of a Consumer Proposal is to settle the amounts owed to the creditors without over-burdening the individual with unmanageable payments and interest, giving a fresh financial start. Consumer Proposal terms can and do vary greatly depending on a person’s unique set of needs and circumstances. The best way to find out if a Consumer Proposal will work for you is to meet with a licensed Trustee.