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Residents of Saskatchewan carry an average non-mortgage consumer debt load of $24,462, which is higher than the national average by more than $2,000. Debt loads are certainly high in this province, making it difficult for Saskatchewanians to make their monthly payment obligations on a regular basis.
It’s no secret that the higher the debt load, the more difficult it is to pay off. With higher debt loads comes an increased risk of defaulting on loans. And the more payments that are late or missed altogether, the more interest you’ll end up paying on any outstanding debt that continues to mount.
While there are a variety of debt relief options to choose from a consumer proposal in Saskatchewan might the solution you’ve been looking for.
Consumer Debt in Saskatchewan
Many Saskatchewan residents may have a high debt load but are financially capable and comfortable enough to continue making regular payments in an effort to whittle down their outstanding principal. However, others struggle with each payment they need to make every month. Even if they have the financial means to cover minimum payments, they may find it extremely challenging to work towards completely paying down their debt and often have little money left over to pay for other expenses.
To learn more about consumer debt, click here.
What is a Consumer Proposal?
A consumer proposal in Saskatchewan is a legally-binding process used to eliminate much of your unsecured debt. To have a proposal filed, you would need to have a Licensed Insolvency Trustee work on your behalf to file the proposal and negotiate with your creditors to have your debt reduced or to have your interest rate decreased. You can request to repay your creditors a portion of the entire debt amount that you owe them or request to have the time required to pay your debt extended.
If your creditors have a problem with your proposal, they can request a meeting of creditors whereby they would argue their case and reject your offer. But if they agree to your proposal, no such meeting is necessary.
There are plenty of benefits of filing a consumer proposal in Saskatchewan, such as:
- Ending collection calls
- Eliminating threats of lawsuits
- Reducing your overall debt load
- Freeing up money to cover other expenses
- Reducing stress associated with challenges faced with repaying debt
Consumer proposals in Saskatchewan are suitable for those who owe no more than $250,000. Any more debt than that would not qualify for a consumer proposal. In addition, you must show that you are unable to pay your debts as they are due and have a steady, stable income source.
When Should You Choose a Consumer Proposal Instead of Bankruptcy
There are many reasons why you may want to choose a consumer proposal in Saskatchewan over bankruptcy:
Protection from creditors without losing assets – A consumer proposal will help protect you from your creditors that you still owe money to, without having to lose all of your assets. In the case of bankruptcy, you can still get protection from potential lawsuits, but you stand to lose some of your valuable assets, including equity in your home and vehicle.
Payments are manageable – There aren’t any pre-set standards as far as how much you will need to pay for a consumer proposal. Instead, you make a proposal to all of your creditors, which is typically a percentage of your debt. The payment you are obligated to make reflects your ability to pay and your income. You should be able to qualify for a consumer proposal, as long as your income is steady and reliable. Generally speaking, a consumer proposal payment will be scheduled around a timeline of anywhere between 48 to 60 months.
For some information about the consumer proposal initial assessment, look here.
More simplified process – Consumer proposals in Saskatchewan are much less complex than bankruptcies, which means they’re a lot easier for consumers to go through and complete. And since they’re not as restrictive as bankruptcy, a consumer proposal can be dealt with through a Licensed Insolvency Trustee firm without having to endure court appearances or monthly reporting to a trustee.
No need to pay more if you make more – With bankruptcy, you will have to supply your trustee with information regarding your income in the form of monthly pay stubs. If you happen to make more money in one month, you will have to pay your “surplus income.” As soon as your Saskatchewan consumer proposal is approved by your creditors, you will never have to pay more money, regardless of whether or not you happen to get an increase in pay.
Read this to find out how long it takes for a consumer proposal to be accepted or rejected.
A Word About Credit Rating
It’s important to understand that your credit will be affected if and when you file a consumer proposal in Saskatchewan. While bankruptcy will negatively impact your credit score, so will a consumer proposal.
Click here to know how a consumer proposal affects your credit.
That said, a note will stay on your credit report for up to 7 years following a bankruptcy, compared to 3 years after the completion of your consumer proposal. This means that if it takes you 2 years to pay off your consumer proposal, it will remain on your credit report for 3 years after that point, for a total of 4 years. During this time, taking out any loans or making any purchases on credit will prove to be difficult until the necessary amount of time has elapsed and your credit report is cleared.
Repairing credit takes time and effort, but it’s important to take steps to improve your credit score in order to improve your position in the eyes of your creditors.
Going through financial hardship is never easy, and if you’re struggling to pay off your debt, you can find yourself stressed out and losing sleep. The good news is that there are options available that can help you settle your debt and put an end to all those collection calls. To find out if a consumer proposal in Saskatchewan is right for you, Loans Canada can help.