Consumer Proposal Guide for British Columbia
Your Comprehensive Guide to Consumer Proposal
The costs of daily living can quickly add up, and many Canadians have accumulated heaps of debt over the years. But while most people have a manageable amount, others feel like they’re drowning in constant bills and mounting interest rates. Bankruptcy isn’t the only solution to these financial woes. In fact, lots of folks across British Columbia have restored their financial well-being thanks to a Consumer Proposal. This solution isn’t for everyone, but it has the power to make debt management much easier in the long run. Learn more about Consumer Proposal’s meaning and how it can help you manage your financial situation.
What Is a Consumer Proposal in Canada?
Let’s start at the beginning. Essentially, a Consumer Proposal is a legal agreement between a debtor and a creditor that helps reduce the total amount of debt owed. The document outlines methods to settle debt payments over a set period of time, and for many, it’s a viable way to save as much as 80% on debt. But debt reduction isn’t the only benefit. A Consumer Proposal can prevent you from having to give up your car, home, or other assets. With the help of a Licensed Insolvency Trustee, you can use this option to grapple with debt and minimize its financial burden.
Is a Consumer Proposal Different From Bankruptcy?
Consumer Proposals have similar goals to bankruptcy, but these terms should never be used interchangeably. You do not have to declare bankruptcy to take advantage of Consumer Proposals, and you won’t have to surrender any assets. What’s more, you won’t need to report your monthly income or expenses to a Licensed Insolvency Trustee. Ultimately, a Consumer Proposal is an excellent alternative to bankruptcy that many people in British Columbia qualify for.
What Debts Can Be Included in a Consumer Proposal?
A Consumer Proposal is meant to be an all-inclusive debt relief solution and includes most kinds of unsecured debts. However, debts like car payments, mortgages, and child support payments may not be covered by a Consumer Proposal. If you have any of the following debts, a Consumer Proposal could be a viable debt reduction solution:
- Credit cards and lines of credit
- Tax debt
- Student loans (once you’ve been out of school for seven years)
- Payday loans
- Personal debts
- Department store cards
- Overdraft fees
How Much Does a Consumer Proposal Cost?
If you’re struggling to make payments on your bills, you likely don’t want a bankruptcy alternative that costs even more. Unlike bankruptcy, there are no additional fees or hidden charges in a Consumer Proposal. Payments are made directly to your Licensed Insolvency Trustee, who then distributes the funds to your creditors. Most proposals allow you to make monthly payments, so it’s even easier to manage your budget while addressing your debts.
How Do You File a Consumer Proposal?
Filing for bankruptcy is a multi-step process, and filing a Consumer Proposal is much the same. Before starting the process, it’s a good idea to know what to expect. Our Licensed Insolvency Trustees will guide you through these four stages and answer questions as they arise:
- Making a Payment Plan—During the first stage, your Trustee will estimate what your creditors would be paid should you file for bankruptcy and use this information to determine how much you’ll pay through a Consumer Proposal. Usually, this payment will be slightly higher than your creditors would receive in the event of a bankruptcy. Then, you can choose to spread payments across up to 60 months.
- Creditor Voting—Once you’ve filed your Consumer Proposal, it’s time to get the creditors’ opinions. Your creditors will be able to review the terms of the Consumer Proposal and vote yes or no. In almost all cases, creditors accept the terms or ask to renegotiate.
- Starting Payments—Now that your plan has been approved, you can begin making payments. You do not need to report your income, but you will have to attend two credit counselling sessions. If you have the means, you may pay off your Consumer Proposal early.
- Repairing Your Credit—See the light at the end of the tunnel? Once you’ve paid off your debts, you’ll receive a Certificate of Full Performance, which will be forwarded to government credit bureaus. After three years, the notice on your credit report can be removed.
Can You Keep a Credit Card With a Consumer Proposal?
In the majority of cases, you can’t keep an active, open credit card after filing a Consumer Proposal. However, specific situations can vary depending on the issuer’s policies and your arrangements with creditors. If your credit cards have a zero balance and the issuer agrees, you may be able to retain them. After filing a Consumer Proposal, you may qualify for a secured credit card, which can help you rebuild your credit over time.
How Long Does a Consumer Proposal Stay on Your Credit?
A Consumer Proposal is meant to help give you a fresh financial start. Nevertheless, a record of this filing will stay on your credit report for about three years after you’ve completed all the payments outlined in the proposal. As long as the Consumer Proposal is on your report, it can affect your ability to access credit, but completing the proposal as agreed is a major step to restoring your financial wellness.
Get in Touch With J. Bottom & Associates
Don’t struggle with crippling debt alone. The team at J. Bottom & Associates is here to help you regain your financial stability. We understand that this may be one of the most challenging times in your life, and we’re well-positioned to provide support and expertise as you need it. We welcome British Columbia residents from New Westminster, Port Coquitlam, and North Vancouver to give us a call and get started on the road to financial recovery. Contact us today to set up your consultation.