Securing debt is something that most people in Ottawa and the rest of Canada will need to do in their lives at one time or another. This can be for anything from a new home to a new car or even your education. Unfortunately, many people are taking on more debt than they should. For example, in Ottawa and the rest of Ontario, household debt is rising rapidly and shows no signs of slowing down.
While some in Ottawa can afford to carry this type of debt and keep up with the payments, this isn’t the case for everyone. Many people in Ottawa actually end up stuck in a world of debt trouble and can find it very difficult to get out. In that case, they might need to rely on a debt relief solution like a consumer proposal.
Can you pay off your consumer proposal early? Click here to find out.
A consumer proposal in Ottawa is a legal process between you and your creditors. If you feel you will be unable to pay off your debts in full, you can come up with an agreement with your creditors to pay back a percentage of what you owe them. The amount you will actually end up paying as a result of your consumer proposal will depend on how much you owe, how much money you make and how much your creditors are willing to accept. Either way, it should cut down the amount of money you have to pay by a pretty large margin.
In Ottawa and the rest of Canada, bankruptcies and consumer proposals must be filed by a Licensed Insolvency Trustee (LITs). These licenses professionals are regulated by the federal government and have been trained accordingly. They are Officers of the Court and they can either work as individuals or as part of a firm.
So while filing a consumer proposal in Ottawa sounds great, there is a bit of a drawback. A consumer proposal will have a negative effect on your credit score and report. In Ottawa and Canada alike, a perfect credit rating is one while the worst credit rating you can have is a nine. For reference, a bankruptcy will leave you with a rating of nine for six years after discharge.
Learn how to improve your credit post consumer proposal, here.
A consumer proposal in Ottawa will leave you with a rating of seven for three years. So while it isn’t as extreme to your credit as bankruptcy, a consumer proposal will still hit your credit fairly hard. While your credit will take a hit, many feel that a consumer proposal is worth it. Being able to actually pay off your debt will allow you to start fresh and start your journey toward building your credit back up, without an overwhelming mountain of debt to worry about.
Thankfully, building up your credit isn’t too difficult to do. While it won’t happen overnight, if you stay responsible and stick to your plan, you should see your credit begin to improve slowly but surely. Here are a few steps you can take to build your credit:
Check this out for even more information about credit scores in Canada. Now that you know what a consumer proposal is and how it will affect your credit, what is the process of getting and offering a consumer proposal in Ottawa? Well, the first thing to do is to find a Licensed Insolvency Trustee that you want to work with (click here to learn all about the consumer proposal initial assessment). You want to ensure they are educated and qualified, while also being someone you are comfortable working with.
Once you have found the right individual or firm in Ottawa, you will work directly with them to create a proposal that will ultimately be sent to your creditors. The main purpose of the proposal is to outline how much of your debt you propose you pay back.
Once finalized, your Licensed Insolvency Trustee in Ottawa will send the proposal to your creditors to seek their approval. In order for the proposal to be accepted, the creditor that holds the majority of your debt must agree to it. Of course, there is no rule or law stating that a creditor must agree to a consumer proposal, so make sure it is an offer that not only works for you, but also for them. When the proposal is accepted, you will have 5 years to make payments to pay back the agreed-upon amount.
So as you can see, a consumer proposal is a suitable debt relief solution for many people in Ottawa. If you have any more questions about consumer proposals or want to get in touch with a Licensed Insolvency Trustee in Ottawa, be sure to contact Loans Canada!
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