A consumer proposal is a kind of offer to settle down your debts. It is a type of debt negotiation where a licensed insolvency trustee is contacted to settle your debts to a specific percentage to be paid over a certain period. Since it is all about dealing with your debt, it’s obvious to be concerned about its impact on your credit card report.

What does it feature?

This proposal appears in two sections- the public record section and the individual account section. The former is updated by the Office of the Superintendent of Bankruptcy when a proposal is filed along with the date of filing. It also has a Trade Account section that features a list of all your debts (conveyed by your creditors) and monthly information like the date of last payment, whether payment is on time, current balance, etc.

When is this information removed?

If we talk of previous rules in Canada including the cities Calgary, Edmonton, Lloydminster, Alberta, it was supposed to be removed three years after the completion of the proposal. Now, this rule is amended. As per the new provisions, all the details will vanish after three years from the date of completion of the proposal or six years from the date of filing, whichever is earlier.

How is it beneficial?

This modification is of immense help for those who give this proposal as it gives six years as the maximum time for the proposal to affect the credit report. That means, even if you take four to five years for completing your proposal, all your debts would be removed in a span of one to two years after your payments are cleared. This also means that you don’t have to give the effort of building your credit once again. Whenever you get a chance of any kind of credit even during the proposal, grab it.

Clarification on positive and negative information

Positive information about a loan like length, type, repayment score, initial amount, balance, etc. can be kept for an indefinite period. This certainly helps in improving your credit score. On the contrary, negative information like missed payments, previous bankruptcies, accounts sent to a collection agency, etc. generally remains in the credit report for 6 years. This undoubtedly hampers the credit score.

Conclusion

Consumer proposal services are a great way to avoid insolvency. Here, you get the reduced amount to pay by an extended period without any interest. All the actions from the creditors must be stopped after this proposal is filed. If you’re someone from Calgary, Edmonton, Lloydminster, or Alberta who seeks debt negotiation and consumer proposal services, Credit 720 is the one-stop solution. They are on the track of Adam Smith who said, “What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?” They work for the best interest of the customers and not the creditors, unlike others.