Understanding Consumer Proposals in Saskatchewan
Understanding Consumer Proposals in Saskatchewan
Consumer proposals are a legal process designed to help individuals in Saskatchewan, and across Canada, who are struggling to repay their debts. This process allows debtors to make an arrangement with their creditors to pay back a portion of what they owe under the guidance and the protection of federal legislation, specifically the Bankruptcy and Insolvency Act (BIA). Understanding how consumer proposals work can help those facing financial difficulties navigate their way to a debt-free future.
What is a Consumer Proposal?
A consumer proposal is a legally binding agreement between you and your creditors where you agree to pay a certain percentage of your debts, extend the time you have to pay off the debts, or both. The proposal is administered by a Licensed Insolvency Trustee (LIT), who works with you to develop a payment plan that is feasible for your financial situation, ensuring you don’t have to sell your assets as you might in bankruptcy.
Benefits of a Consumer Proposal
Opting for a consumer proposal has several advantages. Firstly, it stops all collection calls and legal actions against you by your creditors, including wage garnishments. Secondly, interest charges on your debts are frozen from the date you file the proposal. Also, because you repay only a portion of your debts, you could substantially reduce the overall amount you owe. Another significant benefit is the impact on your credit score; a consumer proposal will stay on your credit report for a shorter period compared to bankruptcy, helping you rehabilitate your financial status sooner.
Process of Filing a Consumer Proposal in Saskatchewan
The process begins by consulting a Licensed Insolvency Trustee in Saskatchewan who will assess your financial situation to ensure a consumer proposal is the right solution for you. If it is, the trustee will help you work out how much you can afford to pay and negotiate with your creditors on your behalf. Once a proposal is filed, all debt collection efforts must cease, and creditors have 45 days to either accept or reject the proposal. A simple majority (in dollar value of debt) is required for it to be accepted. If the proposal is accepted, you will make the payments through your trustee, who will then distribute the funds to your creditors.
Requirements and Eligibility
To file a consumer proposal in Saskatchewan, you must be insolvent (unable to pay your debts when they are due), owe at least $1,000 but not more than $250,000 (excluding the mortgage on your primary residence), and have a stable source of income to make the proposed payments. It’s also essential that you attend two financial counseling sessions during the process to help you manage your finances better in the future.
Conclusion
Consumer proposals offer a viable pathway for those drowning in debt, allowing them to regain control of their financial situation in a structured and less damaging way compared to bankruptcy. However, the decision to file a consumer proposal should be made with careful consideration and guidance from a Licensed Insolvency Trustee, who can provide tailored advice based on your unique circumstances. Taking the step to file a consumer proposal can be life-changing, providing a fresh financial start and a clearer path to achieving your financial goals.