What happens when you pay off a consumer proposal?

Once you’ve made all of your payments and satisfied the terms of your consumer proposal, your Licensed Insolvency Trustee can complete the final steps needed to complete your discharge.

Firstly, your trustee sends a final statement of receipts and disbursements (SRD) and a dividend sheet to the Office of the Superintendent of Bankruptcy (OSB), the regulatory body for insolvency in Canada.

Then, the OSB reviews the information and decides if a court review is required or not. If a review is needed, your trustee will send the following to each creditor:

  • A notice of the hearing for the Court review.
  • A copy of the final SRD.
  • A copy of the dividend sheet for payments to creditors.

If a court review is not required, your trustee will inform your creditors that you are discharged and send the necessary documents.

Next, your trustee will distribute any remaining dividends owed to creditors and complete some other tasks for the OSB, which allows the trustee to sign off the proposal.

Certificate of Full Performance

Once discharged, you will receive a Certificate of Full Performance, which confirms that you’ve successfully fulfilled the consumer proposal’s terms.

Any remaining balance owed from the debts in your consumer proposal is forgiven, and your Licensed Insolvency Trustee will discharge you (release you) from these debts.

You can only eliminate unsecured debts in a consumer proposal.

Some debts survive, including:

  • Support payments to a former spouse or children.
  • Fines or penalties imposed by the Court.
  • Debts from fraudulent activity.
  • Student loans under seven years old.
  • Secured debts such as a mortgage or car loan.
  • Property taxes.
  • An award by a civil court for damages arising from personal or sexual assault.

Questions? Speak to a Licensed Insolvency Trustee if you have any questions about a consumer proposal.

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Can I pay off my consumer proposal early?

If you can afford to, you can finish your consumer proposal early by making larger payments towards it. You do so by paying more each month or paying a lump sum.

Many Canadians complete their consumer proposal early by making additional payments.

The great thing about a consumer proposal is that payments are fixed and never change, even if your income increases.

So, if you receive a pay rise, inheritance or windfall while in a consumer proposal, you can either keep it or use this money to pay your consumer proposal faster.

The faster you pay off your consumer proposal, the quicker you’ll be able to complete it and improve your credit.

Your credit after a consumer proposal

It’s important to note that if you are undertaking a consumer proposal, it’s because you are unable to keep up with your debt repayments or you have debts in collections.

Therefore, a consumer proposal doesn’t cause any further significant damage because these actions have already impacted your credit score.

And remember, it won’t damage your credit forever.

You’ll find that a consumer proposal allows you to eliminate your debts and get your life back on track. So, during and after your consumer proposal, you’ll want to start taking positive steps to rebuild your credit.

See also: How to repair your credit score during and after a consumer proposal

Conclusion

A consumer proposal is a relatively simple process, and you can complete it as quickly as your finances allow.

Inform your Licensed Insolvency Trustee of any changes to your address, phone number or employment. You must also attend two financial counselling sessions and follow any special conditions attached to your consumer proposal.

Then, once you have made the required payments, you are eligible for discharge, and you will receive a Certificate of Full Performance to confirm that you have completed it.

If you are interested in a consumer proposal, talk with a Licensed Insolvency Trustee, who will explain the options available to you and help you find a solution to your debts.

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