The number of BC consumer proposals over the last few years is alarming. What is causing this increase? Economists agree that car loans are one of the chief drivers of growing consumer debt in Canada. And residents of BC 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 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.

Insolvency & Consumer Proposal Statistics in British Columbia

Nationwide
Q3 20 Q2 20 Q1 20 Q4 19 Q3 19 Q2 19 20 vs. 19
Insolvency 21,335 19,767 33,237 35,155 37,708 35,076 -19%
Proposal 13,668 12,903 22,032 21,884 21,161 20,976 -12.3%
British Columbia
Q3 20 Q2 20 Q1 20 Q4 19 Q3 19 Q2 19 20 vs. 19
Insolvency 1,774 1,890 2,635 2,911 2,962 2,881 -16.8%
Proposal 1,199 1,330 1,674 1,856 1,867 1,813 -12.6%

Source: https://www.ic.gc.ca/

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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Annual Consumer Insolvency Rates in British Columbia

(Per 1,000 Population Aged 18 Years and Older)

British Columbia
2010 2011 2012 2013 2014 2015 2016 2017 2018
Insolvency 3.6 3.2 3.2 3.2 3.1 3.1 2.9 2.6 2.6
Proposal 0.9 1.0 1.1 1.3 1.4 1.6 1.6 1.5 1.6
Vancouver Island and Coast
Insolvency 4.1 3.9 3.9 4.0 4.0 4.1 3.8 3.1 3.4
Proposal 0.8 1.1 1.3 1.4 1.6 1.8 2.0 1.7 1.9
Lower Mainland – Southwest
Insolvency 3.1 2.8 2.8 2.8 2.8 2.8 2.4 2.3 2.2
Proposal 0.8 0.9 1.0 1.2 1.3 1.5 1.5 1.4 1.4
Thompson – Okanagan
Insolvency 4.6 4.3 4.2 4.0 3.7 3.6 3.5 3.3 3.4
Proposal 1.3 1.5 1.5 1.6 1.6 1.8 1.8 1.8 1.9
Kootenay
Insolvency 3.5 2.9 3.3 3.1 3.1 3.2 2.8 2.8 2.6
Proposal 0.9 0.9 0.9 1.1 1.1 1.3 1.2 1.4 1.4
Cariboo
Insolvency 4.8 4.1 4.0 4.1 4.0 4.2 4.4 3.7 3.3
Proposal 1.1 1.0 1.3 1.3 1.6 2.0 2.1 1.9 1.9
North Coast and Nechako
Insolvency 4.5 2.4 2.3 1.9 1.9 1.8 2.1 2.2 2.0
Proposal 0.7 0.6 0.7 0.5 0.7 0.7 1.0 1.1 1.1
Northeast
Insolvency 4.4 2.3 2.5 1.9 1.7 2.1 3.8 3.6 3.4
Proposal 1.0 0.5 0.5 0.6 1.0 1.4 2.1 2.3 2.3

Source: https://www.ic.gc.ca/
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