I received an interesting email the other day and I thought I would share it.

The emailer basically didn’t see the point of filing a consumer proposal. He/she stated that if you owe money you should just go to the bank, get a consolidating loan and pay your debt that way. If your credit is poor, he/she just suggested getting a cosignor. In the second part of the email, the emailer also mentioned that he/she didn’t think it was right that the Trustee charges money to administer the consumer proposal.

I will deal with the first point made. It is true, it is always best to try to get a consolidation loan first and we review that option with the people who come in to see us. But let’s look at the reality of the situation. Your bills are already with collection agencies so your credit rating is poor. Since your credit rating is poor the bank won’t lend you money. Times are tough for everyone so not a lot of people are able to co-sign a loan. I didn’t even mention the risk to the co-signor if you are not longer able to pay. Asking someone to co-sign really is a big deal. As a result, the only companies that will lend you money are going to charge really high interest rates.

Now consider the effect on your credit rating. Just because the bill is now paid doesn’t mean it is no longer on your credit report. Negative items remain on your credit report for 7 years after it is dealt with. I have written numerous articles about the consumer proposal process and the pros and cons and I am not going to repeat them here.

The next comment made by the emailer dealt with the fees. Yes, it is true that the trustee charges money to administer a consumer proposal. The trustee is providing a service and I would think you would agree that the trustee deserves to be paid for the time being put in to help you. The fees are regulated by the Bankruptcy and Insolvency Act, so all Trustee’s have to charge the same. If you get a bank loan, the bank will charge you interest. When you do your job do you work for free? No, you expect to be paid for the work you do.

It is important that you review all of your options and consider all the facts before making your decision. I can help with that. Call or email me today with your question or comment.