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  • Derek Lai

What’s a Consumer Proposal?

consumer proposal in Vancouver British Columbia

A consumer proposal in Vancouver is an effective debt solution for those struggling to pay off the full amounts of the money they owe to creditors, in their currently allotted timeframe. As long as the debt accumulated is under $250,000 without including a mortgage from a primary home, individuals are eligible for this option. A consumer proposal can be customized to your financial situation and help you pay off your debt, either by making smaller payments than what you owe, giving you more time to pay it off, or both.

Debtors can obtain help from licensed insolvency trustees in Vancouver like Crowe MacKay & Company, who are overseen by the Office of the Superintendent of Bankruptcy, to propose a legal negotiation with their creditors. You simply cannot request more than five years to pay off your debt. After any potential meetings are held and your creditors approve, you must abide by the terms laid out in the consumer proposal and receive two sessions of financial counselling. If or when you complete the payments and fulfill the proposal, you earn a certificate of full performance that releases you from debt. How Is It Different than Bankruptcy? A consumer proposal is different than bankruptcy in many ways, particularly having less negative impact on your credit rating. It is also preferable to those facing insolvency in Vancouver by not costing you any of your assets, rather simply allowing you more time or less financial obligation regarding what you owe. Your creditors prefer this process over bankruptcy, as well, because they are paid more of the debt that is owed to them through a consumer proposal in Vancouver. Overall, it puts both parties in a better position. Whether this is the right debt solution for you and if you are eligible to file one, it is best to speak with a licensed insolvency trustee in Vancouver. What Is the Success Rate? Consumer proposals are usually approved because creditors recognize that this is a better result for them than if you were forced to file for bankruptcy instead. Since you can also make changes in the event they do not accept the first time, the opportunity to meet your creditors’ satisfaction is high. Certainly, with the help of your licensed insolvency trustee, you can reach a middle ground that works for both you and your creditors. Will It Hurt or Help Credit Rating? A consumer proposal does have some effect on your credit rating. While it is not as bad as filing for bankruptcy, which gives you an R9 score, a consumer proposal gives you an R7. A rating of R1 means you make payments to your creditors on time, so the numbers in between are different lengths of time for how long it takes you. An R7 translates directly to a consumer proposal, which is relatively low, but you are still allowed to keep credit cards. Bankruptcy, on the other hand, is R9. The End Result When facing debt, many people may feel hopeless or confused as to what steps they should take to rectify their financial situation. Speaking with a licensed insolvency trustee in Vancouver like Crowe MacKay & Company can offer a helpful review and relevant advice that enables you to move forward and overcome your debt. Contact us today and begin your road back to financial freedom.

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