Burnaby’s beautiful natural surroundings and diverse culture make it an idyllic place to call home. But living in such a desirable location can come with a high cost of living.
If you’re struggling to make ends meet financially, know you are not alone. When you’re ready to take control of your debt and work towards a fresh financial future, talk to a Licensed Insolvency Trustee (LIT) about a Consumer Proposal.
A Consumer Proposal is a formal debt relief option designed to help Canadians who are drowning in debt but want to avoid filing for Bankruptcy.
An LIT can assess your financial situation and help you decide if a Consumer Proposal in Burnaby is right for you.
What is a Consumer Proposal?
A Consumer Proposal is a legally binding debt settlement arrangement between you and your creditors. In a Proposal, you and your LIT work together to create an offer to pay a percentage of your debt, extend the time you have to pay, or both. You have up to five years to repay your debt.
Who is eligible for a Consumer Proposal in Burnaby?
Eligibility requirements for a Consumer Proposal in Burnaby include:
- You’re a resident of Canada
- You are insolvent (can no longer pay your bills on time)
- You have debt greater than $1,000 and less than $250,000 (excluding your primary mortgage)
What debts are included in a Consumer Proposal?
Only unsecured debts are included in a Consumer Debt Proposal, such as:
- Credit cards
- Lines of credit
- Medical bills
- Payday loans
- Personal loans
- Student loans (if you’ve been out of school for more than seven years)
- Utility bills
Secured debts such as your mortgage or car loan are not part of a Proposal.
What are your responsibilities in a Consumer Proposal?
In a Consumer Proposal, your LIT will file your documents and deal with your creditors. However, you will also have some responsibilities, including:
- Provide your LIT with a list of your assets and debts
- Attend two counselling sessions
- Inform your LIT in writing if your address changes
- Assist your LIT in administering your proposal
What are the benefits of a Consumer Proposal?
When you file for a Consumer Proposal, any wage garnishment, collection calls, or creditor lawsuits against you stop immediately. You can also enjoy the following benefits:
- Repay only a portion of your debt
- Consolidate your debt into one affordable monthly debt payment
- Eliminate interest charges
- Extend the time you have to repay your debt
- Allow you to keep your assets
- Avoid Bankruptcy
Will a Consumer Proposal affect your credit score?
Yes, a Consumer Proposal will negatively affect your credit score. A Consumer Proposal will stay on your credit report for three years after you pay all of your debts or up to six years after you sign the proposal, whichever is sooner. Having a Consumer Proposal on your credit report can make it more difficult and more expensive to borrow money.
What is the difference between a Consumer Proposal & Bankruptcy
Bankruptcy is typically the last resort for people dealing with significant debt. If you qualify for a Consumer Proposal you can avoid filing for Bankruptcy. There are several differences between these two debt solutions.
- Purpose. The purpose of a Proposal is to negotiate a partial repayment plan with your creditors. The purpose of Bankruptcy is to provide a fresh financial start.
- Repayment. In a Consumer Proposal, you repay a portion of your debts. In Bankruptcy, you are typically discharged from most of your unsecured debts.
- Assets. One of the main benefits of a Consumer Proposal is you can retain your assets. In Bankruptcy, you have to surrender non-exempt assets to pay off your creditors.
- Credit score. While both debt help options will negatively impact your credit score, a Bankruptcy will typically have a more significant and longer-lasting effect.
Alternatives to Consumer Proposals
While a Consumer Proposal might be the right answer for many Canadians dealing with debt, there are other debt solutions to consider.
Credit Counselling Burnaby
In credit counselling, you can dig into the root causes of your current debt situation. Your Licensed Insolvency Trustee can help you address your debt and improve your financial literacy. Based on your specific needs, your LIT might teach you how to create a budget or teach you how to use credit appropriately.
Debt Consolidation Burnaby
Debt consolidation is the process of rolling up multiple debts into one easy-to-manage monthly debt payment. There are several ways you can consolidate debt including a debt consolidation loan, a balance transfer credit card, or with a Consumer Proposal.
If you aren’t eligible for a Consumer Proposal, you might need to file for Bankruptcy. While the thought of filing for Bankruptcy can feel scary or humiliating, it’s intended to give honest Canadians who have themselves in a difficult financial situation, a second chance.
Find Financial Support in Burnaby
If you’re questioning whether a Consumer Proposal in Burnaby is the right debt solution for you, reach out to Allan Marshall & Associates at 1-888-371-8900 or complete our online contact form to speak to one of our debt team. Your first consultation is completely free. We look forward to speaking with you.