FREQUENTLY ASKED QUESTIONS ABOUT CONSUMER PROPOSALS
What will I offer in a consumer proposal?
What you offer in a consumer proposal is unique to your financial situation. Your offer can be as little as $85 per month. Factors which impact how much you offer include your:
- Monthly budget and your ability to make payments
- Household income
- Some of your assets
- The total amount you owe
Through a free consultation with a licensed insolvency trustee, they will perform a complete assessment of your financial situation to reach the right offer for both you and your creditors and ensure you know everything about consumer proposals.
How does a consumer proposal affect my credit?
Credit reporting agencies will note your consumer proposal as an R7 on your credit report for three years after it has been completed, or a maximum of six years from when you filed. An R7 rating means that you are making payments through an arrangement with your creditors. Any type of settlement of your debt, other than paying it in full by its due date, will result in this R7 rating.
The R7 rating is only one of many factors which make up your credit score. This rating doesn’t mean that you can not get credit. At Met-Core Financial, we will help you to obtain and rebuild your credit and to minimize the impacts of this R7 rating attached to your older debt. You can have good credit while under a consumer proposal.
Do I qualify for a consumer proposal?
A Consumer Proposal can be filed by any person owing between $5,000 and $250,000 (not including their mortgage). If you need help reducing your debt, you quality for a consumer proposal.
Some of these may describe you?
- I have stable income, but not enough to make a dent in my debts and interest.
- We have assets that we don’t want to let lose.
- I want to stop interest from accumulating so I can pay down by debt.
- In our home we only make the minimum payments on our bills.
- We can pay our debts, but just need more time.
- All my money is tied up in my home.
Will I lose my assets in a consumer proposal?
You get to keep all of your assets when filing a consumer proposal. You keep your house, car, investments, jewellery, and retirement savings. Of course, an exception would be if you have a term of your proposal where you are selling a major asset.
What does a consumer proposal cost?
For once, something in life is free. Your licensed insolvency trustee is paid from the payments offered to your creditors. There are no additional fees, expenses, cost of counselling, or other amounts to pay- just the payment you’ve offered to your creditors. Most often, these payments are made monthly to help fit your budget.
What happens to my tax debt & student loans in a consumer proposal?
Government debt like personal income tax, HST from your small business, or liabilities as a director of a corporation are generally included in your consumer proposal. They are treated just like any other debt. The sooner you can address these debts, the more flexibility you have in working with your creditors. Until you file your consumer proposal, the government has special powers to garnish wages and attach your debt to your property.
If you have been out of school for more than seven years, your student loan is included in your consumer proposal. If you haven’t been out of school for more than seven years, a consumer proposal will pause collection activity until you have completed your proposal.
FREQUENTLY ASKED QUESTIONS ABOUT DEBT MANAGEMENT PROGRAMS
What is the cost of the service?
All consultations are completely free to determine what consolidation option works best for you. As with all Credit Counselling/Debt Management organizations, they do have a small monthly “fee for service”. However, it is quite nominal and is offset with the amount you will be saving in interest and service charges being eliminated or reduced from your creditors. Keep in mind, you will be “debt free” in 5 years or less, substantially less than the 25 – 35 years the credit card companies state on their statements. Imagine the savings.
What is Unsecured Debt?
Unsecured Debt includes Credit Cards, Overdrafts, Lines of Credits, Payday Loans, Department Store, Old Utility/Cell phone bills, any items past due or in collections.
Can I include my Mortgage/Car payment in the program?
No. They are referred to as secured loans and if the monthly payments are not made as prescribed in the loan documents the lending company will begin foreclosure or re-possession action. Not a good thing to have happen. You will want to keep making these payments as is which we will include in your monthly budget.
Can I include Payday Loans in the Debt Plans?
Yes. We can include all unsecured debt such as Credit Cards, Overdrafts, Lines of Credits, Payday Loans, Department Store Cards and any bill in Collections or old utility bills that you are not using anymore. At times we can include Revenue Canada debt and Student Loans.
What happens to my Credit Rating?
Without getting too technical, your credit rating is a record of your bill paying history. If you have been late or missed monthly payments on your credit cards or unsecured loans, it has been reflected on your credit report. Because creditors are going to give you relief on the monthly payment and monthly interest charges, they report this to the “credit bureaus” who adjust your credit rating accordingly.
Can I make extra or lump sum payments into the program?
Absolutely. This will help you to become debt free sooner, and this is what we’re all about. You can make extra payments without penalty.
Will the creditors approve of the program?
Our partner Trustees and Credit Coaches have been dealing with creditors since 2000 and have a blemish free relationship with them. In just about all cases, the creditors approve our Debt Management Plan and we begin the monthly payments. A statement of your account with us is available monthly or quarterly.
Can I qualify with Pension or Disability income?
Yes. Any income that is coming into the household qualifies as income for our Consolidation Options. Even if your spouse or family is supporting you, we will be able to help you be Debt Free.
FREQUENTLY ASKED QUESTIONS ABOUT SCORE-UP
How does it work?
Our Point Deduction Technology® software is based on credit weight algorithms. It analyzes credit data points in real-time to identify those that make the biggest impact—both positively, negatively, and incorrectly—on your credit score. Each item is assigned a weight from 0 to 100+, which indicates how many points your score is reduced. We then develop a strategy to achieve your credit score goal quickly and economically by claiming your points back.
Who monitors my progress?
Receive automated monthly reports and alerts to follow your credit-building progress, indetify new point deductions, and real-time recommendations on how to recover more valuable points on your journey toward your financial goals. Access your credit report anytime to ensure that our software has the most current, complete, and correct version for the best results.
What should i know about my credit score?
Studies show that 79% of all credit data contains errors, which could be working against you. Some errors and omissions include duplicate accounts, inaccurate balances and line items, and unrecorded payments. Our software helps illuminate errors quickly to ensure that lenders, banks and employers see your actual credit report—and you get the best results and rates.
What would Score-up recommend to help increase my credit Score?
Using the Target Score Simulator® software, set a target credit score and receive a personalized strategy to achieve your goal. This list of recommendations will show you which debts to pay off first, where to apply money to creditors, and how to gain valuable points. See how many points you may earn or lose with each simulated decision before taking real action.
FREQUENTLY ASKED QUESTIONS ABOUT RE-FINANCING MY HOME TO PAY DOWN MY DEBT
What is a mortgage refinance?
A mortgage refinancing doesn’t just modify or adjust existing loan terms, a refinancing creates an entirely new mortgage loan. The new loan replaces the old loan. You receive a new, and often better interest rate, a new monthly payment and a refinancing can create a fresh 30-year term. There’s also the option of refinancing for 15 or 20 years.
What’s the purpose of refinancing?
Homeowners don’t refinance for one particular reason, rather there are several reasons to seek a new mortgage loan. Some people refinance to take advantage of lower interest rates and reduce their monthly payment, and others refinance to convert their adjustable rate mortgage to a fixed rate. Also, depending on the amount of equity in your home, you can choose a cash-out refinance and borrow cash from your equity.
How much equity do I need to refinance?
The amount of equity you need to refinance depends on the type of loan and the lender. For conventional mortgage loans, many lenders require at least 20 percent equity, although some banks have relaxed their standards and now only require five percent equity.
How much does it cost to refinance?
Unfortunately, refinancing isn’t without costs. You will pay closing cost, which can range from two percent to five percent of the mortgage balance. If you can’t afford closing costs, some lenders waive these fees in exchange for charging a higher interest rate, or you can include closing costs in the mortgage balance. The latter option increases the total amount you owe on the property.
Do I need good credit to refinance?
Because refinancing creates a new mortgage loan, there’s an approval process. You have to complete a new mortgage application, and the lender will check your credit and income. Bad credit can prevent a refinancing, especially since many conventional lenders now require higher credit scores for mortgage loans.
Do I have to refinance with my current lender?
There’s no rule that says you have to refinance with your current lender, although there are benefits to working with your present mortgage company. They know your payment history, and if you’ve been a loyal customer, they might offer the best rate and waive some of the closing costs to retain you as a customer. However, it’s always financially beneficial to compare mortgage loan quotes with at least two other banks to ensure you’re getting the best rate.
A mortgage refinancing can be the solution if you’re struggling with high monthly payments and you need to take advantage of a lower rate; but unfortunately, refinancing isn’t cheap and you have to re-qualify for a home loan. If you can’t refinance, ask your mortgage lender about other provisions. You may meet the requirements for a mortgage modification, where the bank adjusts your interest rate and monthly payments without refinancing.
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