Consumer Proposal Manitoba - Straight Facts and Other Options

What is a consumer proposal and is it the best option for me?

Filing a Consumer Proposal in Manitoba is a debt repayment option that allows some people to consolidate their debts. It is a legal process between you and your creditors to repay a portion of what you owe, and it is governed by the Bankruptcy and Insolvency Act. To a large extent, the amount of debt you repay to your creditors is based on your income and what you own.

  See if filing a Consumer Proposal in Manitoba, Canada is the best way of consolidating your debt and avoiding bankruptcy.
  All financial decisions have advantages and disadvantages. Consumer Proposals are not any different. A professionally certified Credit Counsellor can help you determine what is in your best interest: a proposal or another option.

A Consumer Proposal can only be arranged and administered by a licensed bankruptcy trustee and it costs approximately $1,500 to file. You pay an initial setup fee to begin, and then, if the arrangement is acceptable to your creditors, you then pay the balance to continue the process. The trustee you work with will additionally hold back 20% of your future payments as an administration fee. For the Consumer Proposal to be legally binding, your creditors who own the majority of your debt must agree to the proposed repayment plan. If they do, you then have to repay the agreed amount over a maximum repayment period of 5 years.

Advantages and Disadvantages of Filing for a Consumer Proposal

There are some clear advantages and disadvantages of filing for a Consumer Proposal. They include the following:

Advantages

   


Beware of the Big Debt Rip-Off
 

Consumer Proposals have unfortunately become the latest way for an increasing number of debt relief companies and their sales people to take advantage of vulnerable, unsuspecting consumers. Make sure you don't let this happen to you! Many of these companies are now claiming to offer Consumer Proposals as an effective way to deal with debt. But there's a problem. In Canada, only a licensed bankruptcy trustee is legally allowed to deal with Consumer Proposals. These debt relief agencies charge thousands of dollars in fees but then refer you to a bankruptcy trustee who then charges his or her own legitimate fees.


How to Prevent Getting Ripped Off

 

  1. Talk to a non-profit Credit Counsellor about your financial and debt situation first. They will review your whole financial picture with you and help you look into and understand all of your options to resolve your debt problems and get your finances back on track.
  2. Never pay anyone for Consumer Proposal services except for a licensed bankruptcy trustee.
  3. Ask how the person helping you is compensated. Many people who will seek to advise you on your debts work on commission. Make sure the "solution" they are suggesting is in your best interest - not theirs.
  4. Credit Counselling Canada is an association of local, non-profit credit counselling organizations who do not work on commission. If a Consumer Proposal is actually one of your best options, they’ll tell you and refer you to a bankruptcy trustee they trust for free.

 

 
       
  • It can be an effective way of consolidating debt in Manitoba if:
    • You cannot afford to pay back all the debt you owe
    • You have steady income
    • Your budget has enough money in it for you to make monthly payments
  • Has the potential to be a good option if:
  • Will put active collection of student loan payments on hold
  • It is one of the final ways of avoiding bankruptcy

Disadvantages

  • It's not private. A proposal is filed as a permanent public record and is included on a searchable database
  • It costs more than going bankrupt
  • The Consumer Proposal must be approved by a Judge
  • It can be rejected by your creditors. If they reject it, you may have to offer them more money for to
  • Missing more than 2 payments may mean that you need to file for bankruptcy
  • Not all debts can be included (like secured loans)
  • If you stopped being a student less than 7 years ago, your student loans can't be included
  • Depending on the type of assets you have, some might need to be sold
  • It may affect future employment opportunities, and the permanent record of your insolvency can put certain professional licenses at risk

How a Your Credit Will Be Impacted by a Consumer Proposal

Once you begin making payments on a Consumer Proposal, a note is placed in the public records section of your credit report that states that you have filed a proposal. Anyone who you have given permission to see your credit report can also see the public records section.

Your creditors may also report a “7” rating on any debt included in your proposal. This rating indicates that they are receiving your payments through a third party. In this case, your trustee is the third party. Your monthly payment on your Consumer Proposal is remitted to your creditors once all applicable fees have been paid.

If you are paying secured creditors, like those who hold your car loan, outside of your Consumer Proposal, those creditors will report your payments on those debts separately. Creating and maintaining a realistic budget will make it easier to keep these debts paid up to date.

If you are able to show a good payment pattern on a secured debt while you’re making all of your proposal payments, you'll be that much further ahead afterwards when you want to re-build your credit.

Contact Us for More Information About Filing for a Consumer Proposal in Manitoba

There are quite a number of options between financial difficulty and bankruptcy. A Consumer Proposal might be one good option for some people, but it's not the best option for everyone. To find out what other options you have, speak with one of our professionally trained Credit Counsellors today, in person or over the phone. Our appointments are free, non-judgmental, and completely confidential.

To ask us some questions or to make an appointment to speak with a Counsellor, phone us in Manitoba at 1-888-527-8999. You can also email or chat with us online right now.

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Best stop before sitting down with a bankruptcy trustee in Manitoba - Canada. Featured online & in the media.

The Credit Counselling Society provides not for profit credit counselling services in Manitoba and is recognized as one of Canada's leading debt relief services with 24 offices in communities across the country.

 

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