Skip to main content

Consumer Proposal in the Northwest Territories - Straight Facts and Other Options | Canada

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

Filing a Consumer Proposal in the Northwest Territories 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.

  Find out if filing a Consumer Proposal in Northwest Territories, Canada is the right option to consolidate your debt and help you avoid bankruptcy.
  Every financial decision has pros and cons. Consumer Proposals aren't any different. An accredited Credit Counsellor can help you figure out if a proposal or another alternative is in your best interest.

A Consumer Proposal can only be arranged and administered by a bankruptcy trustee and costs about $1,500 to file. You pay an initial setup fee, and then, if it is accepted by your creditors, you will pay the remaining balance to proceed. In addition to this, the trustee will also retain 20% of your future payments as a fee for administering your Consumer Proposal. To be legally binding, the creditors who hold the majority of your debt must agree to the proposal. Once they do, you repay the agreed amount over a maximum of 5 years.

Advantages and Disadvantages of Filing for a Consumer Proposal

Consumer Proposals contain certain advantages and disadvantages. These can include the following:

Advantages

   



Beware of the Big Debt Rip-Off

 

Consumer Proposals have become the latest method for a growing number of for-profit companies and their sales people to take advantage of vulnerable, unsuspecting consumers. Don't let this happen to you! Many debt relief companies are now claiming to offer Consumer Proposals as an easy way to get out of debt. There's a problem. Only a licensed bankruptcy trustee is allowed to file paperwork for a Consumer Proposal. The debt relief companies charge thousands in fees only to refer you to a bankruptcy trustee who then charges his or her own fees.



How to Keep from Getting Ripped Off

 

  1. Speak with a non-profit Credit Counsellor about your financial situation first. They will be able to review your situation with you and help you explore and understand all your options to deal with your debt.
  2. Never pay money to anyone for Consumer Proposal services except a licensed bankruptcy trustee.
  3. Find out how the person helping you is compensated. A lot of people who want to advise you on your debts work on commission. Make certain that the "solution" they are recommending is in your best interest - not theirs.
  4. Credit Counselling Canada is a national association of non-profit credit counselling agencies who do not pay their staff commission. They’ll help you figure out if a Consumer Proposal is one of your best options. If it is, they'll refer you to a reputable, local bankruptcy trustee for free.

 

 
       

Disadvantages

  • It's not private. A proposal is a permanent public record included on a searchable database
  • It's more expensive than declaring bankruptcy
  • It must be approved by the Court
  • Creditors can reject the Consumer Proposal - if they do, you may have to offer them additional funds otherwise your proposal will not proceed
  • If you miss more than 2 payments you may need to file for bankruptcy
  • Student loans can't be included if they are less than 7 years old
  • Secured debts aren't included
  • Some assets (such as your home, vehicles, or investments) may need to be sold
  • The permanent record of your insolvency can put certain professional licenses at risk and may also affect future employment opportunities

How a Consumer Proposal Can Impact Your Credit

Once you enter into a Consumer Proposal, a special notation is placed on your credit report in the public records section. Anyone who you allow to look at your credit report can see the public records section.

Additionally, it is possible that your creditors will report a “7” rating on any debt included in the proposal. This "7" rating means that creditors are receiving your payments through a third party. In this instance the third party would be your trustee. When you send a payment to your trustee, they distribute the agreed upon dollar amounts to all of your creditors once all applicable fees have been paid.

If you are making payments to secured creditors, like for a car loan, outside of your Consumer Proposal, those creditors will report on those debts separately. Creating and sticking to a realistic budget will make this easier.

If you are able to maintain a good payment history on a secured debt while you're making your proposal payments, this can help you re-build credit afterwards.

Contact Us for More Information About Filing for a Consumer Proposal in the Northwest Territories

Between financial difficulty and bankruptcy there can be many options. While a consumer proposal may be a good option for some, it isn't the best option for everyone. To find out what options you have, call one of our professionally certified Credit Counsellors today. You can speak with a Counsellor in person or over the phone. Appointments with them are free, non-judgmental, and completely confidential.



For more information or to speak with a Counsellor, contact us in the Northwest Territories at 1-888-527-8999. You can also email or chat with us online right now.

Related Articles of Interest

Related Links

First step before seeing a bankruptcy trustee in  Northwest Territories - Canada. Featured online & in the media.

The Credit Counselling Society is a leading, non-profit credit counselling service provider in the Northwest Territories with 22 locations across Canada.