Now that the debts are under control and hopefully you’ve got some sanity back in your life, you have a couple of options on how to handle your consumer proposal payments. You can continue with regular payments (as agreed with LIT) until you pay it off, and at that point begin to rebuild your credit history…or you can try and pay off your consumer proposal early by making extra lump sum payments or simply increasing the monthly payment. The second option can reduce the credit rebuilding process to just a couple of years. If option two sounds like something you’d like to try, let’s take a look at what makes early repayment such a good idea.
Benefits of Early Repayment
There are two main benefits of early repayment that you must be aware of:
- Your credit rating will improve faster. Your R9 credit rating will be replaced with an R7 rating after it is paid off. It is true that the R7 rating lasts for three years after you finish the proposal but it is better to pay off your proposal sooner and begin rebuilding right away so the amount of time that you have bad credit is reduced.
- The risk of defaulting on your proposal will be reduced. If you have an option to contribute more now it may be a wise choice. We never know what tomorrow may bring.
How to Get Money to Pay It Off Early
As valuable as an early repayment plan can be, it can be a challenge to get the money needed to actually make it happen. Sometimes you might only be able to make the minimum payments required in your proposal, which is totally fine as the payments are based on your budget after all.
But here are a few things you can do to get the money needed to cover the proposal sooner:
- Get a separate savings account with your bank that can go towards paying off your proposal. Saving money in that account will help you feel more in control of your future and also get at least some interest on the money you have. Once you save up enough money you can contact your LIT to arrange a lump sum payment.
- You could borrow money from family members or friends if desired. Be advised that some might not be willing to help you out as they might question your motive. Discuss your concerns with anyone you wish to get help from.
- If you own a home, refinancing is always useful. A refinancing plan could entail getting the existing terms of your mortgage or other financial debts reorganized with new terms that might make it easier for you to pay off your proposal. You may be able to get some of the existing equity out and cover your proposal in one go. The amount you pull out often gets amortized for the duration of your mortgage so the little extra that you’ll pay in mortgage every month will be much smaller than your current proposal payment. Of course, always consult you financial advisor and LIT when considering this option.
- You can also reach us to learn more about what you can do to get your proposal paid off early. We can give you a proper solution for your repayment needs that will be easy to follow.
Call Us For Assistance
It is possible for you to pay off your consumer proposal early. Contact us for additional information on how you can get your proposal paid off sooner. Our consultations are free and have no obligations. We want to help you manage your proposal needs.