If you are considering filing a consumer proposal, you want to know how long it takes.
The short answer is a maximum of 60 months. But the long answer depends on how frequently you can make payments towards your proposal.
This article will look at how long a consumer proposal takes to complete.
How long does a consumer proposal last?
A consumer proposal cannot take longer than five years, but you can complete it in a much shorter time by making larger or additional payments if you can afford to pay more.
Most Canadians decide to make monthly payments, but this can be tailored to suit your cash flow.
Making monthly payments allows you to make an acceptable offer to your creditors while also ensuring your payments are affordable each month by stretching them out over a longer period.
As a result, you can free up money every month that you pay towards your debts, bringing some much-needed debt relief.
In some cases, a lump-sum payment or a combination of a lump sum and monthly payments could suit you better, especially if your employment is seasonal or you are self-employed.
This flexibility makes a consumer proposal a popular way to resolve debt problems.
Can you pay off a consumer proposal early?
You can pay off a consumer proposal as early as you want. If you receive a pay rise, a lump sum of money or a tax refund, you can put this into your consumer proposal to pay it faster.
The faster you pay off your consumer proposal, the quicker you’ll be able to take steps to improve your credit score and rebuild your credit. However, you don’t need to make additional payments if you don’t want to.
While bankruptcy payments can increase if your income rises, your monthly payments will never increase in a consumer proposal, even if your financial situation improves.
Fact: creditors cannot change the terms of the consumer proposal once it starts, and no interest is added to your payments.
How long does it take to be approved for a consumer proposal?
Once a consumer proposal is filed, your creditors have 45 days to review your offer and respond. Your consumer proposal is accepted if a creditor meeting isn’t called during this time.
How long does a consumer proposal remain on your credit report?
A consumer proposal is removed from your Equifax credit report three years after you’ve completed your consumer proposal or six years from the date you filed your proposal — whichever comes first.
On TransUnion credit reports, a consumer proposal will be removed from your file three years after the date you satisfied the proposal or six years after the date you defaulted on the account, whichever date comes first.
Source: Government of Canada: How long information stays in your credit report
How much will I pay during a consumer proposal?
A consumer proposal is a formal deal with your creditors to pay back a portion of your debt. The amount you pay depends on your income, expenses and what you own.
Simply put, your offer to your creditors will be based on what you can afford, with the remaining amount forgiven by your creditors.
Your debt could be significantly reduced, making it one of the best ways to consolidate it.
Although your creditors will be eager to recoup as much as possible, they will likely accept a reduced amount if it is more than what they would receive in bankruptcy.
If your creditors are offered less, they will most likely reject your proposal and hope you file for bankruptcy so they can recoup more money quickly.
How long a consumer proposal lasts depends on your payments
A consumer proposal can take up to 60 months, but how long depends on the frequency of your payments.
Here’s the best bit: you can pay off a consumer proposal as quickly as you want to.
A consumer proposal allows you to consolidate debts, protect assets, and stop creditors from contacting you.
Filing a consumer proposal requires a consultation with a Licensed Insolvency Trustee. If you’d like help with your debts, reach out to a trustee.
We can connect you with a Licensed Insolvency Trustee for a free and confidential consultation today.
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