What Happens After a Consumer Proposal Is Paid Off?

What Happens After a Consumer Proposal Is Paid Off?

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By Bromwich+Smith Staff | 951 words | Reading Time: 4 minutes and 45 seconds | Date: 2023/05/23

What about my credit, is one of the most commonly heard questions by our Debt Relief Specialists and one that we think is important to address. Chances are, if you are looking into debt relief options  you are likely experiencing difficulty paying your bills. You may be behind in your monthly payments, receiving phone calls from your creditors asking when you can pay and seeing past due notices in your mail. Perhaps They are threatening legal action, or have taken you to collections. If this is the case it is very likely that your credit score has already started to decline. The longer that you take to get back on track and have repaid all past due debts, the longer your credit will be in danger of decreasing.  

Will a Consumer Proposal hurt my credit? 

A consumer proposal will affect your credit report, but for many, the short term lower credit score is worth the long term financial assistance. A successful, and completed consumer proposal will be removed from your credit report 3 years after you’ve paid off all the debts according to the proposal, or 6 years from the date it was filed whichever occurs first.  

What happens after I complete a consumer proposal? 

  • Certificate of full performance: You will receive a discharge, or a "Certificate of Full Performance" from the Licensed Insolvency Trustee (LIT) who administered your consumer proposal. This document confirms that you have met all the obligations to your file and that you have successfully completed, and paid off the proposal. 
     

  • Credit report: Your credit report will be updated to show that you have completed your consumer proposal. This will be echoed in your credit score, and it should start to improve over time as you continue to make on-time payments and demonstrate responsible financial behavior.  
    It is important to note, that you do not need to wait for your file to be completed to start repairing your credit. There are many options to rebuild your credit, and gain back your credit score. This can include secured credit cards, contributing to RRSP’s, and utilize credit building programs. Bromwich+Smith works with amazing partners, and are able to refer you based on your credit needs.  

  • Debt relief: All of the debts that were included in your consumer proposal will be considered legally settled. This means that you will no longer owe that money and those creditors cannot take any legal action against you to collect the debts. It is important to know that there are some debts that can not be included in your proposal this includes, but may not be limited to: 

    - Student loan debts that are under 7 years old
    - Court ordered debt 
    - Secured debt- ie car loans, mortgage, home equity loans 

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One of the significant advantages of completing a consumer proposal is the legal settlement of the debts included in the proposal. Once your consumer proposal is successfully finished, you will no longer owe the money to those creditors, and they are prohibited from taking any legal action against you to collect those debts. This relief from collection efforts and legal repercussions allows you to focus on moving forward and rebuilding your financial stability. However, it's essential to remember that certain debts are not eligible for inclusion in a consumer proposal. Examples of such debts include student loan debts that are less than seven years old, court-ordered debts, and secured debts like car loans, mortgages, and home equity loans. It's crucial to consult with Bromwich+Smith's Debt Relief Specialists to understand which debts can be included in your proposal and develop a comprehensive debt management strategy. 

Bromwich+Smith  Debt Relief Specialists are available by phone at 1-855-884-9243, or request a call back at contact us page. We want to see you flourish! Contact us today to get back on track, and put an end to those stressful creditor calls, today! 

FAQ Related to After a Consumer Proposal Is Paid Off

1: Will a Consumer Proposal negatively impact my credit?

Yes, a Consumer Proposal will have an impact on your credit report. However, for many individuals facing financial difficulties, the short-term lower credit score is outweighed by the long-term financial assistance provided. Once you have successfully completed and paid off the Consumer Proposal, it will be removed from your credit report three years after the completion date or six years from the filing date, whichever occurs first. 
 
2: What happens after I complete a Consumer Proposal?

Upon completing a Consumer Proposal, you will receive a "Certificate of Full Performance" from the Licensed Insolvency Trustee (LIT) who administered your proposal. This document confirms that you have fulfilled all your obligations and successfully paid off the proposal. Your credit report will be updated to reflect the completion of the Consumer Proposal, and over time, as you continue to make on-time payments and demonstrate responsible financial behavior, your credit score should start to improve. 
 
3: Can I start repairing my credit before the Consumer Proposal is fully completed?

Absolutely! You do not need to wait until your Consumer Proposal is fully completed to begin repairing your credit. There are various options available to rebuild your credit, such as utilizing secured credit cards, contributing to RRSPs (Registered Retirement Savings Plans), and participating in credit-building programs. Bromwich+Smith can provide guidance and refer you to their trusted partners based on your specific credit needs. 
 
4: What happens to the debts included in the Consumer Proposal?

All debts included in your Consumer Proposal are considered legally settled. This means you will no longer owe the money, and creditors cannot take any legal action against you to collect those debts. However, it's important to note that certain debts cannot be included in a Consumer Proposal, including student loan debts under seven years old, court-ordered debts, and secured debts such as car loans, mortgages, and home equity loans. 

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