How To Know it’s Time to File a Consumer Proposal

I meet with individuals in Brampton Ontario often in a state of panic about their debt and their personal financial situation. They’ve avoided dealing with the problem for as long as they could and are now over the top as far as stress levels.

The earlier you deal with debt problems, the more options you have. Here are some warning signs that it might be time to speak with a Trustee in Bankruptcy about filing a Consumer Proposal.

If budgeting and savings techniques are able to help squirrel away $100 per month (or more), that’s great! But if at the end of the month you’re only making minimum payments towards your debts, or using one credit card to pay off the other, then perhaps it’s time you need some professional help.

How many times have you said to yourself, “all I am doing every month is paying the interest – the debt never goes down!” Thankfully a consumer proposal can put an end to that!

Simply put, a consumer proposal is a legal agreement between you and your creditors (people you owe money to), to pay back a portion of what you (and no more new interest accrues).

A consumer proposal must completed within 5 years (i.e. 60 monthly payments). Ask yourself how long you think it will take you to pay off your debts (not including your mortgage of course). Will it take 10, 15 20 years? If so, consider a consumer proposal.

Ok, this sounds, great, but what’s t downside?

You’re credit rating will be at an R7 while the proposal is active. This basically means that you will not qualify for any new credit while you are in the proposal and for two or three years afterwards.

Here’s a great video from Doug Hoyes explaining Consumer Proposals

Be careful who you deal with! Consumer proposals may only be filed by licensed trustees in bankruptcy acting as a consumer proposal administrator.  There are dozens of scam artists (most call themselves debt consultants or credit counsellors) that will offer to reduce your debt by up to 70%.  They do so by charging you a fee and then referring you to a licensed trustee to file a consumer proposal.

Here’s an video with Ted Michalos & Doug Hoyes explaining Debts Consultant scams on the radio.

If you’ve got more debt than you can deal with then a consumer proposal may be right for you. If you think it is, contact a consumer proposal administrator today to talk about your options.



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