30/06/2022 0 Comments
Can I Pay Off My Consumer Proposal Early?
Did you know that 45% of Canadians feel overwhelmed by their debt?
Are you in debt and struggling with finances? Or maybe you're out of debt and ready to pay off your consumer proposal.
Consumer proposals serve as an alternative to bankruptcy, and this blog highlights everything you need to know to pay off your consumer proposal early and the benefits associated with early payments.
How Long Does a Consumer Proposal Last?
Filing for a consumer proposal allows you to pay creditors based on the payment plan negotiated by your Licensed Insolvency Trustee. The maximum time administered in consumer proposals is five years.
The good news is that you can pay off a consumer proposal early, which benefits your credit score if you do!
How to Pay Off a Consumer Proposal Early?
If you're making your payments on time and possess the financial stability to pay off your consumer proposal early, you can pay off your debt before the five-year limit. Here are ways you can reduce the timeframe of your consumer proposal:
Make Larger Monthly Payments
When paying off consumer proposals, you need to make your minimum monthly payments to stay on track. But, if you make higher monthly payments, you reduce the time spent repaying your debts and increase your credit score faster.
After you've paid off your consumer proposal, your credit reflects the proposal for three additional years. To minimize this, pay off your proposal earlier to get your credit score back sooner.
Make Additional Payments
Say you get a bonus at work. Instead of using that money to go on vacation, putting it toward the consumer proposal benefits your credit score in the long run.
Paying more than you're scheduled to also allows you to get your credit score back sooner and diminishes the risk of missed payments. Plus, signing up for bi-weekly payments decreases the time you'll spend paying off your debts.
Avoid Missed Payments
You have five years to pay off your proposal, but you can only miss three payments before you recollect your debt. Avoid missing payments by speaking with your LIT and coming up with a monthly amount that works for you.
Track Your Spending
Tracking and budgeting what you spend on a day-to-day basis helps you save money. Put the extra money you're spending on extraneous items towards paying off your consumer debt.
Knowing what you're spending helps you find debt relief sooner and helps you avoid landing in more debt in the future. Use your budgeting skills to avoid future situations of debt.
Ready to Pay Off Your Consumer Proposal?
The Licensed Insolvency Trustees at F. J. Zielski & Associates specialize in helping you consolidate and undo your debt. During a consultation, we explain options for debt repayment programs in detail to ensure you pursue the debt consolidation plan that's right for you.
You can pay off your consumer proposal early and find your way back to financial freedom. Don't let your debt get you down. To learn more about the process for filing a consumer proposal, or strategies to pay off your consumer proposal early, contact us to book a consultation. We are available to serve clients in Belleville, Kingston, Trenton, Cobourg and throughout Ontario.