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Will a consumer proposal impact your credit score? Yes, a consumer proposal will have some impact on your credit. It lowers your credit score temporarily and appears on your credit report.
However, once the proposal is finished, nothing will stop you from improving your credit score. Many people worry about what a consumer proposal might do to their credit. The truth is that by using this debt relief method, you can improve your future credit and financial decisions. One reason for this is that credit counselling is required as part of a consumer proposal. This will then help you to practice healthy financial habits which can help improve your credit score.
What is a Consumer Proposal?
- It is a legal debt settlement program that provides debt relief to consumers without filing for bankruptcy. In a consumer proposal, the debtor includes all unsecured debt and agrees on a term to pay back a portion of the debt, interest-free. The repayments are normally planned out over a five-year period on a monthly basis. After examining your income, assets, obligations, and other financial factors, a debt expert can work with you as regards to what repayment amount and other terms in the most cost-effective way. Consumer proposals can result in significant savings for the debtor and provide relief from a variety of unsecured debts, including bank loans, credit card bills, payday loans, income tax debts, etc.
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How Long Does a Consumer Proposal Stay on Your Credit
According to the Financial Consumer Agency of Canada, Transunion and Equifax will delete the entry for a consumer proposal off your credit report three years after it has been finished or six years from the date the proposal was filed, whichever comes first. A "Certificate of Full Performance" will be issued to you after your consumer proposal is complete, with all payments done and 2 counsellings are done. To ensure your credit record is changed as soon as possible, it is advised that you forward a copy of this document to Equifax and TransUnion with a list of the debts contained in the proposal.
Errors in Credit Reports Following the Completion of a Consumer Proposal
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It's fairly unusual to discover errors on your credit report after the consumer proposal is over. It's best to have the errors fixed as soon as you can so that your credit report shows the most accurate information possible. After all, you're anticipating a brand-new beginning and credit restoration after a consumer proposal is finished. For the purpose of updating inaccurate data on your credit report in Canada, both TransUnion and Equifax have procedures in place.
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Check your credit report to see if creditors are displaying any previously owed amounts as settled or still pending. By sending a correction request to Equifax or TransUnion, you can start a rectification process if any errors are discovered. The request should be accompanied by a completed Credit Investigation Request Form and any relevant papers that serve as proof of your request.
Restoring Your Credit
After filing a consumer proposal, you can repair your credit in a number of simple ways. This includes:
- Getting a secured credit card.
- Ensuring prompt payment of all debts.
- Whenever possible, pay more than the bare minimum.
- Try to refrain from opening new accounts until the present ones are settled.
What are the Pros of Filing for a Consumer Proposal?
A consumer proposal, is one of the best alternative to bankruptcy, it offers significant advantages to overcome debt;
- Get out of debt faster by cutting your debts by up to 80% and stopping all interest.
- In 3 to 5 years, your debt will be paid off.
- Keep all your assets, including any home equity.
- Merge your debts into one, manageable monthly payment.
- Stop paying interest immediately
- If the majority accepts your offer, you can tie all creditors to it legally.
- Put an end to collection agencies' calls
- Put an end to lawsuits and legal action
- Put an end to wage garnishments.
- Your payment terms are fixed, which doesn’t limit you to increasing your income.
- You avoid becoming bankrupt.
Filing for A Consumer Proposal in Ontario with the Assisstance of EmpireOne Credit
- First step would be picking up the phone and speaking with a debt expert at EmpireOne Credit for a free consultation, we have years of experience assisting Canadians with debt relief that is tailored to their financial situation. We will analyze your financial situation and work with you to determine what debt relief option is suitable for you. Your peace of mind can be restored, and you can start a journey toward financial freedom.
- Get in touch with us to get a FREE consultation and start your journey towards financial freedom. Call us at (416) 900-2324. Debt-free feels good!
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