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As the largest metropolitan area in Saskatchewan, the city of Saskatoon currently has a population of just over 273,000 citizens. Unfortunately, it’s also one of the most expensive places to live in Canada, so consumer and household debt can be very problematic for many residents in the area.
If you’re one of those Saskatoon residents and you’re struggling with an unmanageable amount of unpaid debt, then it may be time to file a consumer proposal. Take a look at the following information if you’re interested in this effective legal process.
Let’s start with the basics. As mentioned, a consumer proposal is a debt management procedure that you can legally file for in Canada once you have between $5,000 and $250,000 worth of unsecured consumer debt.
Though the conditions of your own proposal will vary based on where you live, what your income is like, and what kind of debt you have, the process is relatively the same in every Canadian city, including Saskatoon. Typically, it goes something like this:
While all this might seem pretty straightforward, a consumer proposal, whether it’s in Saskatoon or elsewhere, can have a serious negative impact on your financial health, so it’s essential to get proper advice before you apply yourself.
Remember, in order to draw up a proper consumer proposal, your LIT will need to assess the amount of debt you have, as well as how healthy your income and employment situation is. If you truly cannot pay your debts in full, they will attempt to get your outstanding balance reduced and help you settle it on a monthly basis.
Then again, there are some real problems that could arise during and even after your payment plan is complete, which is why it’s extremely important to prepare yourself.
Perhaps the most noticeable impact will be on your general finances. Regrettably, while you’ll be free from your unsecured debts, your bank account could be severely drained in the months that follow, especially when you factor in all your other expenses.
Although you’ll hopefully have a lower debt balance, you may still have to dedicate hundreds of dollars a month toward your payments alone. If you can’t keep up with your plan, be sure to inform your LIT immediately to avoid any further debt problems.
While the effect may be less apparent initially, your credit report will also sustain some long-lasting damage that can make it harder for you to get approved for new credit products in the near future, at least until your finances have recovered.
Firstly, any credit accounts associated with the process will automatically receive an R7 credit rating until your proposal is finished. The event will also be recorded in your credit history for 3 years following your final payment. During and after this period, new lenders will consider you riskier, so you may only qualify for smaller, more expensive subprime loans and credit products.
Sadly, certain debts aren’t eligible for coverage under the average consumer proposal. Strictly speaking, a ‘secured’ debt cannot be included because a lender is holding onto one or more of your assets as collateral. Many legal or government-related debts must also be excluded.
Take a look at the following examples to know if your debt will qualify for a consumer proposal in Saskatoon:
Bankruptcy is another legal debt management process that’s available in Saskatoon. Similar to a consumer proposal, this involves contacting a Licensed Insolvency Trustee to settle your unsecured debts through a series of court-assigned payments and duties, all of which will eventually be recorded for public knowledge.
However, bankruptcy is more effective in certain respects and could potentially be completed within a quicker time frame, if you have a strong enough income. Having said that, bankruptcy has a much heavier negative impact on your finances, credit report, and even the properties you own.
Despite it being a slightly safer process than declaring bankruptcy, a consumer proposal can still cause significant harm to your credit report and tie up your finances for months, even years at a time. For those reasons, it’s once again imperative to only enter the process when you:
If you’re still not sure whether a consumer proposal in Saskatoon is the appropriate option for your debt problems, don’t hesitate to contact Loans Canada for advice. We can help you find the best Licensed Insolvency Trustees in your area or, if necessary, connect you with another debt management solution.
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