Consumer Proposal FAQs

What is a Consumer Proposal?

Consumer Proposal can be considered a debt settlement. The debtors and creditors work out a repayment agreement through a trustee in bankruptcy or a debt settlement company.

What are the benefits of Consumer Proposal?

Some of the benefits:

  • Interest charges stop
  • Collections stop
  • Garnishments are settled
  • An affordabe monthly payment plan is set up to repay the debt
  • A three, four or five year payment plans available
  • Up to eighty percent of the debt can be written off
  • The consumer proposal record comes off the credit report three years after completion
  • The debtors can retain their house and vehicle(some conditions apply)
  • Can be paid off earlier if the debtor has the funds to do so

These are just some of the benefits, email us for a free assessment to see if this is a right option for you.

How does Consumer Proposal affect my credit score?

Usually, the individuals credit score is already damaged when they begin to consider a debt settlement. The large debt amounts, late payments, collections, and paying a minimum payment only for a long period of time, has a negative impact on the persons credit score.

In these situations the difference on the credit report will not be significant. The debtor will have an R7 rating for 3 years after fullfillment of the proposal. However, this is not a major hinderance to obtaining credit as most leneders take many factors into consideration when reviewing a credit application:

  • Income
  • Debt/Income ratio
  • Current collections/Judgements

After the individual has filed a proposal it is advisable for them to aplly for the secured credit card or a secured loan(not with the any of the lenders included in the settlement) to start rebulding their credit. Generally, two to three years is enough rebuild credit and obtain a high credit score.