Written by: www.consumerproposals.com
Are you living in Manitoba, are suffering from the discomfort of debt, and are searching for an effective debt management solution that is not Bankruptcy? If so, you should consider filing for a Consumer Proposal. Consumer Proposals are generally seen as the number one alternative to bankruptcy, so find out if it is right for you today!
Here, we will provide you with everything that you need to know about a Consumer Proposal and how it can help you.
Consumer Proposals, or proposals to creditors, are generally best for individuals who have a decent job and pay and can afford to make payments towards their debt, however they need more time to do so. A consumer proposal will give you this extended time as they allow you to repay your debts over a period of generally 3-5 years.
Consumer proposals are also best for individuals who have $5,000 – $75,000 in debt. You are eligible to file a proposal if you have up to $250,000 in debt, but if your debt reaches that level, then you may want to consider a different debt solution.
A Consumer Proposal is similar to a debt management plan in that they both work best for individuals who are able to make payments but need more time to repay their debts. However, unlike a debt management plan, a Consumer Proposal is legally binding as well as it is administered by the Court and a licensed Bankruptcy Trustee, providing more security in the long run.
Although most Bankruptcy Trustees offer free consultations, they do need to be paid in some way. Trustees are generally paid out of the proceeds from your Consumer Proposal, at a rate set by the Superintendent of Bankruptcy. You do not usually have to pay a separate administration fee in addition to your consumer proposal payments.
Advantages of Filing a Consumer Proposal
There are many advantages to filing a Consumer Proposal. These advantages include:
- The maximum period of time for making payments is 5 years;
- Interest charges are frozen from the date that you file your proposal;
- You and your Trustee are able to negotiate with your creditors to repay a portion of your debt rather than the whole amount;
- Wage garnishments stop almost immediately;
- Your creditors are prohibited from taking any legal actions against you throughout the duration of your proposal; and
- You avoid personal bankruptcy, leaving you with a less damaged credit score and giving you a better and more efficient financial life.
Consumer Proposal: The Process
The process of a Consumer Proposal is a step-by-step process:
- First, your Trustee will work with you to assess your financial situation in which they will determine the amount that you are able to pay on a monthly basis.
- This amount will then be compared to the amount that you owe to your creditors, in which your Trustee will determine how many months that it will take you to repay your debts.
- If the amounts seem reasonable to both you and your creditors, then your Trustee will prepare the paperwork that you need in order to file your Consumer Proposal.
- Immediately after you file your Consumer Proposal, your credit rating will be adapted to reflect your current financial situation. Your credit report will most likely stay this way until your proposal is completed. Further, a note will stay on your credit report for three years from the date you complete your consumer proposal.
- As stated in the Bankruptcy and Insolvency Act, your creditors will have 45 days to vote for or against your consumer proposal after you file. If 50% or more of your creditors vote in favour of your proposal, then it is considered accepted by all of your creditors. Typically your creditors will accept your proposal as they would receive more money from a Consumer Proposal than a Bankruptcy.
- However, if 25% or more of your creditors vote against your proposal, then your Trustee will call a meeting of creditors, which you must attend, where you may have to re-negotiate your proposal
- After 15 days, if there are no objections to your proposal, then the Court will approve it. You and your creditors are then locked into the terms of the proposal from that day on.
- Throughout the duration of your Consumer Proposal, you are permitted to miss up to two payments that will have to be made up during or at the end of your proposal. If you miss three payments, however, your proposal will collapse and will be deemed annulled by the Court. If this happens, interest charges are applied to your debt back to the date of which you filed, as well as your creditors can go to court to have your wages garnished.
If you are experiencing financial troubles and you feel that a Consumer Proposal may be the debt solution for you, then please feel free to contact one of our bankruptcy trustees in Manitoba for a free initial consultation. We will discuss your financial situation and solutions, providing you with all of the information that you need about your available debt relief options. We will help you find the best solution for your particular financial situation, leading you to a relaxed and debt free financial life.