Step 1: Know What Consumer Proposal is in Canada.
The federal government in Canada has designed a legal solution to assist Canadian citizens with substantial consumer debt. It reduces debt owed to unsecured creditors, an extension of time for debt repayment, or both.
Step 2: Know the Characteristics of the Consumer Proposal.
- Debt Reduction: It cuts your debt by half or even less, up to 70% of total debt, so you just pay 30% of your debt.
- Easy Payments: It offers an extended period for repayment and plans an affordable repayment amount and terms.
- No Extra Expenditure: Once your consumer proposal is agreed upon, creditors will stop adding interest costs, late fees, or other charges on your debt and its repayments.
- Legal: It is approved by the federal government of Canada. Therefore, it is a legal agreement administered by an Insolvency Trustee nominated by the government.
- Provide Relief: Consumer is a better option than bankruptcy, letting the beneficiary keep their property safe from severe credit repercussions.
Step 3: Know What Debts Included in Consumer Proposal in Canada.
Consumer proposal includes only unsecured debts. It means the debt that is not secured by any assets. Generally, the following types of debts are included in consumer proposals in Canada
– Credit Cards: All types of credit cards, including MasterCard, Visa, Amex, etc.
– Personal Loans: These include lines of credit, renovation loans, consolidation loans, etc.
– Payday Loans: It includes payday installments and advances from payday lenders.
– Student Loans: It include individuals who have ceased to be a student before seven years at the time of filing a consumer proposal; the entire debt will be snuffed by the consumer proposal.
However, in the case of a person who has not ceased to be a student before seven years at the time of filing the consumer proposal, a portion of the student loan will be discharged by the consumer proposal.
– Tax Debt: A consumer proposal can discharge the amount owing for personal income tax, including interests and penalties, amount of GST debt, Child Benefits overpayment, CPP & OAS overpayment, etc.
Step 4: Know How to File a Consumer Proposal in Calgary, Edmonton, Lloydminster, & Alberta
The following steps involve filing a consumer proposal in Calgary, Edmonton, Lloydminster, and Alberta.
– Consultation: Set up a free consultation with your Licensed Insolvency Trustee (LIT) to prepare a summary of your debts, assets, income, and expenses. It helps in creating an offer to your secure creditors.
– Prepare Consumer Proposal: Using all furnished details, your LIT will prepare a statement of affairs that includes a sworn declaration of your assets, income, and expenses. Your LIT will prepare a report explaining why creditors should accept the proposal.
– Review by Creditors: After 45 days, creditors review the proposal; if the majority of the vote favors it, it will be accepted. If amendments can work, they suggest all and accept an amended proposal.
– Payments: You must fulfill payments according to the schedule suggested in the proposal. In between, two consultation sessions are required, and eventually, you will get a completion certificate from your LIT and your creditors to reflect everything in your credit scores.
Step 5: Who Can File Consumer Proposal?
- Your unsecured debt must not exceed $250K (except mortgage).
- You must be a legal citizen of Canada or have property.
- You can pay a significant portion of your debt.
- You must be insolvent. It means your debt must be greater than the value of your assets.
Step 6: Know What Advantages of Consumer Proposal Edmonton
Let’s learn the advantages of consumer proposals in Edmonton, Canada.
- It protects you from unsecured creditors.
- It saves you from additional interest rates.
- Consumer proposal deals with all unsecured debts.
- It leaves limited scopes to differ monthly payments.
- It leaves less severe impacts on your credit rating and credit scores.
- You never lose your control over your assets.
- You can pay your debt early if you have income provision for it.
- You can hold and use credit cards during the consumer proposal payment period.
- It acts as a credit check for future loans.