Understanding Consumer Proposals

The Consumer Proposal provides you with protection from your creditors while in these programs (no garnish).  This program will protect all of your assets (house, mortgage renewal, vehicles, personal and household items, etc.). To help to explain and understand consumer proposals, credit counseling and bankruptcy, I will be sharing my own personal ongoing experience. This is a more detailed version of my earlier post - Getting Debt Off My Back.
When it became apparent back in March of this year that I could no longer keep my head above water when it came to my financial situation. A drastic drop in wage ($27/hr + $125/day living allowance to $12.44/hr) just couldn't pay the bills - I was almost $50,000 in debt. For 6 months I worked 2 jobs ( approx 60-65 hrs/wk)  but health-wise and a financial dispute with one employer ended that in February and one month after that I had to sit down and force myself to look at my options. I had already lost my truck last year and was worried about my home, and credit card companies taking me to court - the harassing phone calls were already coming in.
Through my Facebook feed an advertisement for debt relief came up and I looked into I clicked on it and read the testimonials and how they could help me. They were advertising consumer proposals, a legal procedure that can relieve up to 80% of one's debt. One of the reviews specified a particular agent at the company of Debt Relief Canada. I contacted Laura and she explained all of the options to me: Consumer proposal, bankruptcy and credit counseling.
Laura felt the best option for me was a consumer proposal. I qualified as I owed more than $10,000. She felt this was the best option as it requires less of a monthly payment than credit counseling and bankruptcy payments often shift from month to month. The following figures is what I would pay per month per option as provided to me by Laura.
Option #1: Consumer Proposal - Federal Government Program
Unsecured debts = $49,272

• Debts consolidated to $15,600 (includes $600 admin fee)
• Interest reduced to 0% Interest
  Repayment schedule set at $250 for 60 months (you can pay this off sooner).

We were able to get it down to $200 per month

• Option #2: Debt Management Plan/Credit Counseling
  Unsecured debts = $47,277 (excludes income tax)
  Debts consolidated to $52,200 (includes the non-profit agency 10% admin fee of $4,728.
• Interest reduced to 0%
• Repayment schedule set at $870 for 60 months.

Option #3: Bankruptcy (fyi, not discussed in detail, not recommended)
Cost of Bankruptcy is based on your net income and value of your assets
Based on your current net income and asset value you would  pay $225 for 9 months plus approximately. If your income increases, the cost of bankruptcy will increase and continue for 21 months.

Note:  Prior to deciding to proceed with a bankruptcy, I suggest you reach out to a real estate agent and request a letter of opinion or free market analysis.  This will give you the current approximate value of your home.'

 A Consumer Proposal and the Debt Management Plan is removed from your credit history 3 years after you've paid in full (8 years in total, unless you pay off sooner).  A  Bankruptcy is removed from your credit history 7 years after you've been discharged (8 years in total).

So I decided on a consumer proposal and this is the list of things I needed to send her to get the process rolling and my cost to me.

Birth Certificate or Passport or Canadian Citizenship or Landed Immigrant Papers (one)
·         Driver’s License
·         Two Recent Pay Statements
·         2016 Income Tax Notice of Assessment (or summary page, if the NOA hasn't yet been received)
·         Statement of Accounts, Invoices, Bills, Loan Agreements, Security Documents (Choice MC, AmEx, TD Visa, RBC Visa, Home Hardware, RBC Line of Credit & RBC Bank Account)
·         “Letter of Opinion” or "Free Market Analysis" – Realtor
·         Current Mortgage Balance Statement and Mortgage Penalty (if applicable)

·         Property Tax Bill
·         F350 Registration, Insurance & Loan Balance Statement (or original loan document)

Note* You may be required to send in more. It all depends on individual situations.

Cost of Program - $600.00 as follows:
1st meeting – Paperwork started - deposit of $300 is due (1/2 admin fee)
2nd meeting – Court officer approval - deposit of $300 is due (1/2 admin fee)
3rd meeting – Signing appointment - 1st proposal payment of $250 (or less), is due

I sent in all the paperwork as required and a week later I was informed that my signing appointment date had been set for May 29th . I initially called Laura on April 3 by phone. It took almost 2 months to get to the signing appointment but that is part my fault. It took me about 3 weeks or so to get a real estate agent to come out and view my home and then another week to get me a letter of opinion to me. In actuality the process is much quicker if you get everything needed right away.

When I arrived at my appointment at Abakhan and Associates, a licensed solvency trustees, and  I was given a thorough explanation of both consumer proposals and bankruptcies. I was also informed that I must attend 2 financial advisement appointments as part of the program.

I signed some papers giving Abakhan power to oversee my proposal which meant submitting paperwork into court.  The $200/per month must be in my account on due date. A missed payment may be costly and two will pose risk on your proposal validity.

I hope my experience will help you to decide what is right for you if you are facing financial hardship.

Are you in a similar situation? - comment below and continue the conversation!

Cheers, Sue!