Consumer Proposal Winnipeg

Crafting a Consumer Proposal

A Consumer Proposal is tailored to meet the debtor’s specific needs. The offer must promise the creditors more money than they would receive if the debtor filed for bankruptcy. The LIT plays a crucial role in structuring a Consumer Proposal, helping you determine the amount you can afford to pay and the time period for the payments.

Voting on the Proposal

Once the proposal is filed, creditors are given the opportunity to vote for or against it. As long as the creditors representing the majority of your debt’s dollar value vote in favor, the proposal is accepted and binds all unsecured creditors. Rarely are these proposals rejected, thanks to the LIT’s expertise and understanding of what specific creditors deem acceptable.

Payment Process

During the Consumer Proposal, payments are made to the LIT, who then distributes the money to the creditors until the proposal is completed. At that point, the remainder of your eligible debt is discharged.

Lump-Sum Proposal

In certain instances, individuals might have an external fund that isn’t sufficient to repay all debts but could cover a portion. In such cases, a lump sum proposal might be filed. If accepted, a fixed amount is paid upfront, distributed to the creditors, and upon the proposal’s completion, all remaining eligible unsecured debt is discharged.

Financial Counselling

Consumer Proposals require you to attend two financial counselling sessions provided by your LIT to assist with budgeting and planning.

Advantages of a Consumer Proposal

Here are some potential benefits of filing a Consumer Proposal:

• Affordable means of repaying a portion or all of your debt.
• Eliminates additional interest charges.
• Provides protection from collection actions by creditors.
• Prevents or stops garnishments from unsecured creditors.
• Tremendous flexibility in the design of the proposal.

Disadvantages of a Consumer Proposal

Despite its benefits, a Consumer Proposal also comes with certain drawbacks:

• It often costs more than filing for bankruptcy.
• It generally lasts longer than bankruptcy.
• If you fail to complete the proposal, the remainder of the debt is still owing.

Debts That Cannot Be Discharged

Certain debts cannot be discharged through a Consumer Proposal. These include student loans less than 7 years old, alimony, maintenance, child support, fines and penalties of the court, debts resulting from fraud or misrepresentation, and intentional injury claims.

Seeking Professional Help

If you find yourself struggling with debt, it’s wise to seek professional help from a Licensed Insolvency Trustee. The sooner you seek out debt solutions, the more options you will have to solve your problem.

Avoiding a Rip-Off

Consumer Proposals have become a method for some profit-driven companies to exploit vulnerable consumers. To avoid falling prey to such scams, always seek help from a government-licensed bankruptcy trustee, as only they are legally allowed to offer and get paid for these services.

Credit Impact

Filing a Consumer Proposal affects your credit report. A special notation is placed in the public records section, visible to anyone checking your report.

Conclusion

While a Consumer Proposal can be a viable option, it may not be the best for everyone. Always consult with a professional credit counsellor to understand all your options.

Winnipeg Consumer Proposals can be a life-changing solution for those struggling with debt. However, it’s crucial to understand the process fully and seek help from trusted professionals to ensure you’re navigating this path wisely.