Consumer Proposal Selkirk, Manitoba – Other Options & Stuff You Need to Know
What is a consumer proposal, and is it my best option?
One option to consolidate your debts is to file a Consumer Proposal in Selkirk. 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
Consumer Proposals contain certain advantages and disadvantages. These can include the following:
- It can substantially reduce the amount of debt you are required to pay your creditors
- It can be an effective way of consolidating debt in Selkirk, 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:
- You aren’t able to qualify for a consolidation loan
- If you have debts (like high government debt) which need to remain outside of a debt management program
- Will put active collection of student loan payments on hold
- It is one of the final ways of avoiding bankruptcy
- 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
It’s Okay to Ask for Help with Debt
“Life just happened. My debt got to the point where I started to feel like I was drowning. I didn’t feel like I could fix it on my own, and I wanted to start living my life as an adult without debt. I decided to reach out for help. Feeling relieved, I knew that everything was going to be okay – a lot of work – but okay. I had a plan to pay back my debt and continue doing the things I love to do like yoga and travelling.”
– Yasmine, Actual Client
Watch Out for the Big Debt Rip-Off
Consumer Proposals have become the newest way for a growing number of companies and their sales people to take advantage of unsuspecting, vulnerable Canadians. Don’t let this happen to you! A lot of companies offering debt relief are now claiming to provide Consumer Proposals as a great way of getting out of debt. But there’s a problem. Only a government licensed bankruptcy trustee is permitted to file paperwork for a Consumer Proposal. These debt relief companies bill people for thousands in fees only to refer them to a bankruptcy trustee who then charges his or her own fees.
How to Keep from Getting Ripped Off
Follow the three suggestions below and begin by talking to an accredited member of Credit Counselling Canada (Canada’s national association of not-for-profit credit counselling organizations who never pay their employees commission). If the agency you speak to believes that a Consumer Proposal would truly be one of your best options, they’ll let you know and refer you to a reputable bankruptcy trustee in your area for free.
Talk to a Not-for-Profit Credit Counsellor
Only Pay a Trustee for Consumer Proposal Services
Watch Out for Consultants on Commission
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 monthly payments to secured creditors (like paying for a vehicle loan) outside of your Consumer Proposal, those debts will be reported separately by the creditors that you are paying. If you can create and stick with a realistic budget, then it should make this easier.
If you are able to keep up a good payment history on any secured debts while you are paying off your proposal, this can assist you in re-building your credit more quickly afterwards.
When you’re experiencing financial difficulty, you may think that bankruptcy is your only option. There are a lot of options to deal with debt in Canada. A Consumer Proposal isn’t the right option for everyone, but it can be a good option for some people. To find out what options might be right for you, call one of our accredited, professional Debt Counsellors today. Our appointments are either in person or over the phone. They don’t cost you anything, are non-judgmental, and are completely confidential.
For more information or to arrange an appointment to speak with one of our Counsellors, contact us in Selkirk at 1-888-527-8999. You can also email or chat with us online right now.
You may find some of these articles to be helpful.
Debt Consolidation Options & Alternatives
Find Out How a Debt Management Program Works
Consumer Proposals Versus Bankruptcy - The Differences
Putting Your Interests First
Our goal is to always put consumers first and look out for their best interests in everything we do. One way we do this is through transparency and accountability. We are held accountable to the most rigorous standards in our industry.
- The Office of the Superintendent of Bankruptcy for Manitoba
- List of Licensed Bankruptcy Trustees
- Insolvency Terms & What They Mean
- Credit Counselling Society Manitoba office locations
The Credit Counselling Society is a leading, non-profit credit counselling service provider in Selkirk, Manitoba with