You may be wondering what you can do to pay off your consumer proposal faster. You don’t want to make any mistakes that will cost you more money or cause your debt to grow even more significant than it already is. The following blog post will discuss the things not to do when paying off a consumer proposal.
Using your RRSP savings
Some applicants consider using their RRSP to help them pay down the consumer proposal faster. This is not a solution that we recommend because it comes with short-term and long-term consequences, both financially and in terms of utility for your retirement funds once you retire from working life.
The long-term consequences are that you will be taking retirement funds away from your future self. Your early withdrawal can have a lot of negative implications, like the tax liability and potential benefit suspension by an employer or even garnishing wages if it’s in an RRSP plan at work.
The short-term consequence could mean paying more money because taxes were taken out when we started withdrawing before the eligible age.
Borrowing money to pay off pending loans
Some people consider taking out loans and using them to pay down their consumer proposal early. This may present several problems, such as the high-interest rates that lenders will likely offer you due to your credit score and an active Consumer Proposal showing on your Credit Score.
You could end up costing yourself more money than necessary by borrowing unsecured debt while trying to recover with this solution instead of just putting forth effort towards getting back on track.
We understand that it can be hard to turn over your finances to someone else, but we want you to know how much experience we have. Dana MacRae has helped people across Ontario to dig themselves out of debt and find financial stability. Please talk with us about a consumer proposal today or call for more information on what they could do for you.