Can You Pay Off A Consumer Proposal Early?

It is possible to pay off a consumer proposal early, either with a lump sum payment or by accelerating your existing monthly payments.

When you negotiate a settlement of your debts through a consumer proposal in Ontario, your creditors agree to how much they will receive in full settlement of your debts. For example, if you owe $32,000 in unsecured debt, you may offer your creditors a total of $12,000 to settle those debts. You might agree to pay $250 a month for the next 48 months until the full $12,000 is repaid.

During  your proposal, your financial situation might improve. Your income may increase due to a pay raise, you may work more overtime or you may receive an unexpected windfall such as a bonus, lottery or inheritance. Or perhaps you sold an asset such as a second car.

You can pay off your consumer proposal early, and as a result, receive your certificate of completion sooner. Options can include:

• increasing your monthly payment (in our case from the agreed $250 to say $300 a month);
• making additional or accelerated payments when you have extra funds available;
• paying the balance of  your proposal in full in the event you come into a windfall.

While you can choose to pay off your consumer proposal early, your creditors cannot demand that you do so. If you receive a windfall but would like to continue with your consumer proposal payments as planned, you can.

The advantage of paying off a consumer proposal early is that the note on your credit report about your consumer proposal will be removed earlier as well.

For more information about consumer proposals in Ontario, contact a Bankruptcy Ontario Trustee for a free, confidential, consultation.