Debt Consultants Referring People to file Consumer Proposals



Debt consultants advertise that they can settle your debts for a fraction of what you owe, all while promising to stop collection calls and wage garnishments. What they don’t say is that they are advertising the exact same service that only a Licensed Insolvency Trustee can administer: a consumer proposal. A consumer proposal is a legal arrangement between you and your creditors where you agree to repay a portion of your debt. Although, the amount offered to…


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Improve Your Credit Score by Filing a Consumer Proposal



You want to eliminate your debts by filing a consumer proposal, but you are afraid that your credit score will be harmed, and you will never be able to borrow again. Most of the people I meet with have that same worry. You are not alone.  Fortunately, I have some good news: In most cases a consumer proposal will improve your credit score. Here is an actual case history (with all identifying information changed): Joseph M….


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Joint Consumer Proposals – When It’s A Good Idea



Most consumer proposals are filed by one person, but it is possible to file a joint consumer proposal. We will start with the assumption that you are eligible to file a consumer proposal and that this is the best debt relief solution. Whether or not you should file a consumer proposal jointly, or individually, depends on the circumstances. Joint Proposals are for Joint Debts A joint proposal can be filed where two people have debts that…


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Should You Get A Loan To Pay Out Your Consumer Proposal?



Consumer Proposals

It may be hard to believe, but there are companies that offer to loan you money to pay out your consumer proposal.  The rationale is simple: the sooner you pay off your consumer proposal, the sooner you can begin to rebuild your credit. There is some truth in that statement.  A consumer proposal remains on your Equifax credit report for three years after you finish the payments, so by paying it out early you get…


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Should I Cash In My RRSP To Pay Off My Consumer Proposal?



Consumer Proposals

One of the advantages of filing a consumer proposal is that your monthly payments are often less than they might be in a bankruptcy. This means you can use your extra cash flow any way you like, including continuing to make contributions to an RRSP. This might be particularly attractive to you if your employer matches your RRSP contributions. But what if you’ve built up some savings in your RRSP, enough to pay off your…


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Avoid the Surplus Income Penalty with a Consumer Proposal



Consumer Proposals

In a bankruptcy the amount of money you are required to pay is based on your income. Each month you are required to provide your trustee with copies of your pay stubs and proof of any other income. If you earn money above a certain threshold, you will be required to pay more into your bankruptcy. This is a government rule and it is called surplus income. In many regards it is a penalty because the more…


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Consumer Proposals: What is the Acceptance Rate?



You are filing a consumer proposal to deal with your debts, but obviously if your creditors don’t agree to your proposal, there’s not  much point in filing a proposal. For a consumer proposal to be accepted, a majority of the dollar value of your creditors must accept the proposal.  So, if you have $50,000 in unsecured debts, you need $25,001 of those dollars to vote to accept the proposal.  If more than half of the…


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Who Talks to My Creditors?



Consumer Proposals

The main reason most people consider filing a consumer proposal is that they want to stop the companies they owe money to (their creditors) from calling. Unfortunately many “debt consultants” take your money, but don’t actually talk to your creditors! Why? Because their strategy is for you to avoid your creditors for as long as possible in the hopes that by avoiding them they will be more agreeable to making a deal on your debts….


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Why Do Consumer Proposals Have Different Payments When the Debts are the Same?



Consumer Proposals

A consumer proposal is a great way to eliminate your debts, but how much will it cost? The amount you will be required to pay in a consumer proposal is based on many factors.  Here is an example to illustrate how payments are determined. I recently met with Evan (not his real name).  He had $60,000 in total debt, so he offered a proposal of $400 per month for 50 months, for total payments of…


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Why a Consumer Proposal May be Better Than Bankruptcy



Consumer Proposals

As one of the leading filers of consumer proposals in Canada, I read with interest a blog post by Richard Cooper of Total Debt Freedom titled What is a Consumer Proposal?  Mr. Cooper correctly states that, once accepted, a consumer proposal stops collection calls, prevents court action, and eliminates your debt.  He then says this: I would even argue a consumer proposal does more damage then just filing straight bankruptcy due to the time frame…


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