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My Positive Experience with Consumer Proposal

Freedom from debtIn 2009, something occurred that I had never anticipated: I became insolvent.

How could this happen? Wasn’t I a responsible person? Wasn’t I sensible, smart enough to understand interest rates?

But, happen it did.

I have a home-based company. Business had been brisk for over 10 years. But in 2009, as the recession deepened, my income went down sharply. And I realized … I didn’t have any wiggle room. I had over $60,000 of consumer debt, accumulated years earlier during my business start-up. I’d never had difficulty with the payments … until the recession hit.

One day I realized … “next month, I can’t make all the payments.” I had been using strategies that may sound familiar, like paying the minimum payment to a maxed-out credit card, then withdrawing what I could and paying the next credit card with those funds. At the end of the month, all accounts would still be at their limits. I knew I was “borrowing from Peter to pay Paul,” but thought it was temporary.

When I saw I was in real trouble, I went online and found the Bankruptcy-Canada website. Petrified that I might have to go bankrupt and possibly lose my home, on this site I found information about Consumer Proposal. Could that be an option?

I contacted a nearby Trustee. I admit, when I arrived, I was so anxious I was shaking. I would have to tell what “I had done” … gotten to the point that I couldn’t pay my bills. I felt ashamed and very small.

The Trustee immediately put me at ease, explaining that my situation was common –  caused by the way consumer finance works. Although credit cards are handy, he said, credit companies know full well that a percentage of people will not, in the end, be able to pay.

I also learned that Consumer Proposal was a good solution for me – I had an income and could afford a monthly payment, leaving enough money for my personal expenses.

I felt much better. At my next appointment I brought my bills and a simple list of  household budget and income figures. The Trustee did the rest, and reassured me that, “life goes on.” Before I signed the paperwork, he reviewed his calculations and showed me everything my creditors would see. This was a huge relief – the monthly payment, although significant, was small compared to all the monthly payments I had juggled up until then.

Off went the Proposal to the creditors … the wait-time is 45 days. The few companies that voted at all, voted yes. My Trustee said this was typical. Consumer Proposals are very routine and the acceptance rate is high.

My payments were $350 monthly, for five years. As for the rest of the story – it went perfectly smoothly! A key feature of CP is that if you have the funds (say your income goes up at some point), you can pay the CP off early. I paid off my Proposal during the fifth year.

So, what began as a terrifying situation had a positive ending. Those debts are gone, and I know that I paid what I could in the process. You can only do your best, right?

My only regret is the stress I endured while deciding what to do. Knowing what I know now, I encourage anyone experiencing similar financial distress to see a Trustee. There is no risk. You will not be judged. And, if you are not sure you “click” with the Trustee you see, you can schedule a meeting with another one. The appointment is free.