Are you currently carrying a lot of debt? Have you been managing to make your payments, but find it a major challenge to pay any more than the minimum balance each month?If so, you’re not alone. Thousands of Nova Scotia residents have found themselves drowning in debt, made worse by the sky-high interest rates that their balances are attached to.
The average amount of consumer debt that Nova Scotians carry is currently $22,229. That’s roughly in line with the national average but is a very high number nonetheless. What’s more, Nova Scotia has the highest delinquency rate in Canada at 1.81%, an increase of more than 8% since 2016.
That should come as no surprise, as a rise in debt load tends to increase the risk of defaulting on payments. The higher the amount of debt, the higher the odds of being delinquent on loans, which can cause a slew of financial and legal troubles.
If you’re already finding yourself immersed in financial difficulties and even threats of litigation and wage garnishment, you may want to start taking steps to finally alleviating your debt woes and get back on the path of financial freedom. And consumer proposals in Nova Scotia may be a viable option for you.
What is a Nova Scotia Consumer Proposal?
A Nova Scotia consumer proposal is a great way to pay off any outstanding and mounting debt. It provides a way of reducing debt amounts or extending the amount of time needed to make payments. Negotiating with creditors can help you come up with a settlement that will end the collection calls and stop any continued threats of lawsuits. It can also help you avoid the possibility of having your wages garnished in order to pay off your debts.
For more ways of stopping collection harassment in Canada, check this out.
A consumer proposal is essentially proposed to your creditors, who can either accept or reject your proposal. If they choose to reject it, such objections will be communicated in a meeting of creditors. If they accept your proposal, you can immediately get protection from your creditors and end up with a much more workable debt load that is easier for you to manage.
What is Involved in a Consumer Proposal Process in Nova Scotia?
Your first step in the consumer proposal process in Nova Scotia is to make an appointment to speak with a Licensed Insolvency Trustee. This professional will listen to your situation and explain all available options. Should you decide that a Nova Scotia consumer proposal is ideal for you to finally eliminate your debt, then the trustee will begin preparing a proposal to be submitted to your creditors and negotiate on your behalf.
Once your consumer proposal is filed, your creditors will be informed of it. They will then have 45 days from the time the proposal is filed and sent to consider the proposals made.
Look here to read about the consumer proposal’s initial assessment.
During this time, you won’t have to make any debt payments or be charged any interest. Any of your creditors who have at least a 25% claim on your debt may request to have a meeting of creditors held if they so choose. At this meeting, your creditors will have the chance to either accept or reject your proposal while your trustee represents you.
After your consumer proposal is accepted by a minimum of 51% of your creditors, the court will approve it and you’ll then be required to start making monthly payments to pay off whatever debt amount remains. It’s crucial that you make each payment on time and in full every month since you will be considered in default if you miss three monthly payments. Your payments will be negotiated with your trustee and creditors and are based on how much you can afford.
Your trustee will assist you in each step of the process and enlighten you on appropriate and workable budgeting strategies that can help keep you on track with your scheduled payments. It’s also important that you attend two credit counselling sessions as a mandated part of the Nova Scotia consumer proposal process. Going through all the necessary steps and completing the required tasks will help you finalize your consumer proposal and be released from your debts.
Should You Choose a Consumer Proposal or Bankruptcy?
Both consumer proposals and bankruptcies will help you deal with your debts, but there are some key differences between the two.
| Consumer Proposals | Bankruptcy | |
| Payments | Your trustee works with you and your creditors to come up with an agreed-upon repayment plan upfront. When the proposal is accepted, you will know precisely what you have to repay. | The amount you must pay back to your creditors every month could vary based on your income. If you have “surplus income” – such as if you get a raise or work overtime hours – you might be required to pay more. That can translate into a big difference in cost between the two types of debt settlement solutions. |
| Duration | With a consumer proposal, you pay a set amount. You can effectively bring your consumer proposal to an end sooner if you pay it faster and start rebuilding your credit a lot faster. | Bankruptcy lasts for a set minimum amount of time. If this is your first bankruptcy and do not have surplus income, you may be discharged from bankruptcy in nine months. If you have surplus income, you won’t be discharged until at least 21 months after filing. If this is your second bankruptcy and you have surplus income, your bankruptcy will last a minimum of three years. |
| Credit Rating | Equifax – the largest credit reporting agency in Canada – reports consumer proposals as an R7, which is a little better than bankruptcy. This rating will stay on your report for three years after your proposal payments have been completed. | Equifax will report your bankruptcy as an R9, which is considered the worst rating. Bankruptcy typically remains on your credit report for at least 6 to 7 years after being discharged. It can be in your report as long as 8 years if you have a 21-month bankruptcy. |
Need to consider bankruptcy in Nova Scotia? Read this first.
Final Thoughts
A consumer proposal is not exactly an ideal process to have to go through, but it can be a real lifesaver if you ever find yourself in a financial predicament. If your debt is getting in the way of your life in Nova Scotia, perhaps a consumer proposal might be your way out. To find out if this option is best for you, be sure to speak with a credit counsellor or Licensed Insolvency Trustee in Nova Scotia today.
