BC Consumer Proposal

Despite a brief pause in the growth of consumer debt across Canada during the early part of 2012, Canadians added an average of nearly 6 percent to their consumer debt levels by the end of the year. Growth in the last quarter of 2012 was particularly strong, with an almost 3 percent increase over the third quarter of the year.

What is causing this increase? Economists agree that car loans are one of the chief drivers of growing consumer debt in Canada. Interestingly, BC residents made some progress in paying off their debt, at least in the fourth quarter of 2012. By the end of the quarter, the average level of consumer debt per capita in BC was 4 percent less than at the beginning of the quarter.

While this is encouraging, residents still have a higher average total of consumer debt per capita than residents in all the other provinces and territories in Canada. This looks likely to continue for some time to come, raising concerns that BC borrowers might default on their consumer credit lines such as credit cards, installment loans, and auto loans.

If you are a BC resident and you are having trouble paying your bills on time, there is hope for you. A debt solution known as the BC consumer proposal can make your debt more affordable and manageable.

Basics of the Consumer Proposal in BC

The government of Canada created the consumer proposal so that residents could enjoy bankruptcy protections without the high fees of bankruptcy. Essentially, the last option before filing bankruptcy is the consumer proposal. BC residents draw up this proposal in conjunction with a licensed bankruptcy trustee. This proposal reduces your principal and typically freezes your interest charges, lowering your minimum payments for satisfying your debt and helping you pay it off more quickly. You make payments to your creditors via your trustee in one lump sum or an agreed-upon payment plan.

One of the best parts of the consumer proposal is that it can force hostile creditors to give you more favorable terms for your debt. If creditors who hold at least 51 percent of your consumer debt agree to the BC consumer proposal, all of your creditors must abide by its terms.

What Else Should I Know about the Consumer Proposal in BC?

There are other benefits of the consumer proposal. BC residents no longer have to face calls from debt collectors once the proposal has been accepted. The consumer proposal also secures and protects your assets.

There are some disadvantages, however. While the consumer proposal is great for those who owe up to $250,000 in consumer debt ($500,000 for married couples), this solution is probably too drastic if you owe less than $10,000. The greatest disadvantage is the fact that the consumer proposal has the same negative impact on your credit as a bankruptcy. It may cost less financially in the short term to secure a consumer proposal instead of a bankruptcy, but you will be unable to get new credit at an affordable interest rate for seven years after the proposal is accepted. That can be a problem for your long-term financial plan.

Do I Need to Know More?

The only sure way to know whether a consumer proposal is the right choice for you is to compare it to other debt solutions such as debt settlement. Fill out the Canadian debt relief questionnaire for more information on why a debt settlement program may be a better option for you.


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