FAQs Archive - Page 3 of 6

Q: What are lump sum payments?

Lump sum payments are the opposite of a monthly payments, where instead of paying smaller payments over time you pay a larger ‘lump’ payment upfront.

Q: What is debt settlement?

When a person settles a debt, they are paying less than the amount borrowed to a lender who promises to close any outstanding accounts and cease collections in exchange. Settling is a common negotiation tactic among third-party collection agencies that purchase consumer debt from other lending companies at a steep discount. Settling can be negotiated directly between the consumer (you) and lender or collector, or it may involve a settlement program.

Q: Is a consumer proposal worth it?

Whether consumer proposal is worth it depends on what you need your consumer proposal to do. Consider the three L’s of consumer proposal: Do I need LEGAL protection from my creditors to stop wage garnishment or prevent a pending small claims court case? Will I pay LESS than the total amount of debt that I owe if I file consumer proposal based on my income, assets, and dependants? How will filing a consumer proposal LIMIT my ability to meet future financial goals such as homeownership or retirement? Remember, the goal of a consumer proposal should always be to improve the situation. If you do not need legal protection from your creditors, will not benefit from reduced debt, or are concerned with credit impact, a credit-sparing alternative such as a Debt Management Program may be more appropriate.

Q: Can you get credit while in a consumer proposal?

Yes and no. While you can get some types of credit while in consumer proposal, typically you will be restricted as to what type. For example, vehicle financing or leasing is typically permitted, as are mortgages, property rentals, and secured or prepaid credit cards, but other types of borrowing will not be allowed.