Can I Repay My Consumer Proposal Sooner than Expected?
Did you recently file a consumer proposal, or are you considering doing so now? Are you wondering whether it’s possible to pay off the balance faster if you have the funds to do so? The licensed insolvency trustees at Bernier & Associates in Gatineau and Ottawa offer several financial recovery services, including consumer proposals. Keep reading to find the answer to this question, plus many others.
Is it possible to pay off your consumer proposal early?
The short answer is yes. Your consumer proposal concerns the specific amount you must pay to your creditors. You won’t be charged penalties or interest if you pay it back faster. In fact, you’re encouraged to accelerate the process if your finances allow it.
Why accelerate your repayment?
There are several good reasons to pay off your debt faster. You may find yourself in a situation where your cash flow has improved, perhaps due to a new, higher-paying job or a pay raise or bonus at your current job. You might also want to use an inheritance or tax refund to reduce the remaining balance on your consumer proposal.
What are the advantages of repaying faster?
When you repay your consumer proposal faster, you release yourself from the responsibility of monthly payments, which benefits you and your creditors. The money you save on those payments could, for example, be used to pay for other expenses. You can also put it aside to increase your savings.
A faster repayment also has a positive impact on your credit rating. While your consumer proposal is in effect, you have an R9 rating. Once you finish paying off your consumer proposal, you receive a score of R7, which remains in effect for three years. Both scores affect your ability to get a loan. Accelerating repayment lets you achieve a better credit rating faster.
In addition, if you’re more than three months late on a payment, your consumer proposal gets cancelled. By making advance payments, you give yourself a boost that could help you later if your financial situation forces you to miss a payment.
Do you want more information about the consumer proposal process? The team at Bernier & Associates in Gatineau and Ottawa can answer all your questions. Contact us today to speak with a qualified licenced insolvency trustee.