After so long watching the pennies and counting down the months until the Consumer Proposal is complete, the day you make that last payment is a great day. What an achievement to be debt-free at last! All sorts of thoughts will be whirling around your head once the gloom of debt is no longer hanging over you, and you’ll feel a mixture of relief and apprehension.
When your next wage packet comes in all of it will be yours to spend as you wish, but should you? And what about credit? Will you ever be able to get a mortgage/credit card/loan again?
Here are a few pointers to help you as you get to grips with debt-free living now your repayment plan is finished:
Your Consumer Proposal Is Complete, You Are Debt-free…Now Go And Celebrate!
This might seem like a strange piece of advice, but you must not underestimate the mountain you have just climbed. After four years of hard slog, when the next wage packet comes in take a few pounds to treat yourself to something nice. It might be a bottle of champagne or a ticket to see your favourite band. Don’t let the occasion go unmarked. Create a happy memory.
Be Patient For A Little While Longer
It may take a few more months for your Licensed Insolvency Trustee to tie up all the loose ends of your Consumer Proposal so you will not receive your discharge letter for some time yet. The final payment must be made to each creditor and the relevant paperwork about writing off the remainder of your debt needs to be sorted out. Don’t worry unnecessarily about the time it takes.
Keep Up With Your Budget
Your Consumer Proposal provided you with the most valuable budgeting skills you could ever have. These will form the foundation for your debt-free future. You will probably want to build some treats into your budget, but otherwise for a few months keep going as you have been and save some of your surplus income into an emergency fund.
Have A Goal
Now you have disposable credit you can start to make plans for the future. Perhaps you want to go on a once-in-a-lifetime trip or save up for a deposit on a house. You might even like the idea of starting your own business one day. Now’s the time to dream a little and use your budget to work out how much you might need to achieve your dream and when you could do it by.
Rebuilding Your Credit After A Consumer Proposal
Your credit record will have taken a knock because of your situation and this will take some time to put right. You can expect to see reference to the Consumer Proposal on your credit record for six years after completion. However, that doesn’t mean you can’t go about slowly and carefully rebuilding your credit record.
The most recent events on your credit history outweigh events that happened some time ago so this is an opportunity to overlay some good credit events on top of your previous credit problems.
If you have a mortgage, make sure you make every payment on time. The same goes for any other payments you are making on items that could not be included in your Consumer Proposal, such as secured loans.
There is also another way, but this is only an option if you are very disciplined and it suits your situation and attitude. If you know that you have a problem with self-control when it comes to credit cards, do not attempt this.
After your repayments has finished, you should be able to obtain a credit card with a very low monthly limit that is specifically designed for people who have financial problems.
These usually have very high APRs, but for credit rebuilding purposes that doesn’t matter. Use the credit card to buy one thing every month – perhaps a weekly shop or a tank of petrol – and then pay off the balance immediately when the bill comes in.
This is very important, so you do not get charged interest. Keep on doing this month after month and you’ll begin to build up a good credit record.
Avoid Temptations To Overspend Or Get Into More Debt
There will always be temptations around every corner, but be super vigilant and head them off before you get caught out, such as:
- If you are using your credit card to rebuild your credit, don’t use it for buying other items besides that one monthly credit-building purchase
- Don’t allow friends to persuade you to spend more than you know you can afford. If necessary, take cash out with you and leave your cards behind
- Talk yourself into going on a spending spree as an antidote to the four years spent paying your Consumer Proposal
- Being talked into special deals or discounts on store cards
- If you know you have a weakness for retail therapy in the past, stay away from the shops or better yet, leave your purse behind so you cannot be tempted to spend anything
Life after a Consumer Proposal can feel a little bewildering, so it’s important to slow down once the initial rush of excitement passes and take the time to plan your future.
Staying free from debt can be tough, especially if you’re surrounded by people who think nothing to popping everything on credit, but the more you prepare and plan the easier it will be to say no to debt if it ever comes calling again!
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.