Consumer Proposals in Thompson
What you need to know and watch out for.

Consumer Proposal Thompson, Manitoba - Other Options & Stuff You Need to Know

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

One option to consolidate your debts is to file a Consumer Proposal in Thompson. It is a legal process under the Bankruptcy and Insolvency Act between you and your creditors to repay part of what you owe. The amount you repay is largely based upon your income and what you own.

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

  • It can reduce the amount of debt you need to repay your creditors by a considerable amount
  • It can be a helpful debt consolidation method in Thompson, 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
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- Delores, Actual Client

 

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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 a Consumer Proposal Can Impact Your Credit

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 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 Thompson, Manitoba

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 Thompson at 1-888-527-8999. You can also email or chat with us online right now.

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