Have a question about Consumer proposals? This Consumer Proposal FAQ should help!
- Is a consumer proposal the same as bankruptcy? No. While they are similar, a consumer proposal is not the same as bankruptcy. There are distinct differences. You can find out more about those differences here.
- Is a consumer proposal a debt consolidation loan? No. A consumer proposal is not a loan. It involves a proposal made to your creditors, proposing an amount (usually less than what you owe) that you will repay over a maximum of five years. Once accepted, you begin paying in accordance with the repayment terms of the proposal. A debt consolidation loan consolidates your debts but does not reduce the total debt owing.
- Is a consumer proposal a debt settlement? It is a negotiated legally binding agreement with your creditors that leaves you repaying an often-reduced amount of debt with a single monthly payment. Only a Licensed Insolvency Trustee can file a consumer proposal on your behalf.
- Will I have a single monthly payment? Once accepted, you will make a single monthly payment.
- Will I keep having to pay interest? All interest stops accumulating once the proposal is accepted.
- Who do I pay? In a consumer proposal, you make the monthly payment to your trustee. The trustee then pays your creditors.
- Can I keep my house and my vehicle? This largely depends on equity and value, so a free, no obligation consultation with a trustee is best.
- Will a consumer proposal ruin my credit? While it is reported to your credit report, it is removed from your report 3 years from when it is paid in full. However, you can begin to rebuild your credit rating with in a consumer proposal. Your trustee can give you some credit rebuilding best practices.
- Who files and administers the consumer proposal? Only a Licensed Insolvency Trustee can file and administer a consumer proposal.
- Does it reduce my debt? Yes, in most cases a consumer proposal can significantly reduce your overall debt.
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