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What is the Difference Between a Consumer Proposal and Debt Consolidation in Alberta?

  • BNA
  • October 17, 2019
  • Questions About Consumer Proposals

What is the Difference Between a Consumer Proposal and Debt Consolidation in Alberta?

Short Answer

In Alberta, a consumer proposal actively works to pay back your creditors at zero interest. A debt consolidation loan or service merely shifts all of your debts into one loan payment, with interest. Remember, you can not borrow your way out of debt, you must eventually deal with it.

Longer Answer

A consumer proposal is a legally binding agreement that is put in place to provide Canadians and Albertans with immediate protection from debt collectors and it also secures a partial repayment of your total unsecured debt owing, which is agreed upon by the affected creditors. Your creditors would rather recover some payment than no payment at all, so under a consumer proposal, a Licensed Insolvency Trustee works out a payment plan between you and your creditors that is mutually agreed upon. All interest ceases, and at BNA Debt Solutions, our clients typically pay back just 37% of their debts on average. Meanwhile, debt consolidation services offer a loan to cover your outstanding debts. While this will eliminate creditor calls, it puts the debtor right back into another cycle of debt. Some debt consolidation services offer loans at high interest rates, rivalling those of credit cards. When a debtor takes a debt consolidation loan, they are merely putting all of their debts into one “basket” as opposed to actively taking steps to pay them down without interest.

Related Questions About Consumer Proposals

What is the qualification for a consumer proposal?

BNA June 20, 2019

Short Answer Legally you must owe at least $1,000.00 meets the qualification for a consumer proposal but practically, we would never let anyone file a

Read More »

Can you buy a house while in a consumer proposal?

BNA June 25, 2019

Short Answer Legally there is nothing that would not allow you to buy a house while in a consumer proposal, however you may have difficulty

Read More »

Is a Consumer Proposal Considered Bankruptcy in Alberta?

BNA October 17, 2019

Short Answer No, a consumer proposal is not the same as a personal bankruptcy in Alberta, as each have different rules, methods and guidelines as

Read More »

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