Consumer Proposal Services in Manitoba

Understanding Consumer Proposal Services in Manitoba: A Comprehensive Guide

In today’s fast-paced world, financial difficulties can strike anyone, leaving them struggling with overwhelming unsecured debts such as credit cards, personal loans, and payday loans 14. When faced with such challenges, many Manitobans seek effective debt solutions to regain control of their finances 15. One such solution is a Consumer Proposal, a legally binding process that allows insolvent individuals to propose a debt repayment plan to their unsecured creditors 12 16. This comprehensive guide aims to shed light on Consumer Proposal Services in Manitoba, providing valuable insights into this debt relief option 15.

Throughout this article, we will delve into the intricacies of Consumer Proposal Services in Manitoba, exploring its benefits, eligibility criteria, and the step-by-step process of filing a proposal 4 5 16. We will also discuss the crucial role of Licensed Insolvency Trustees (LITs) in supervising the process and the potential outcomes after filing a Consumer Proposal 4 17. By the end of this guide, readers will have a clearer understanding of how Consumer Proposal Services can help them navigate their financial difficulties and avoid bankruptcy 11 15.

Understanding Consumer Proposal Services in Manitoba

Consumer Proposal is a legal process that allows Canadians to consolidate and reduce their debt, repaying a portion of what they owe while the remaining balance is forgiven by creditors 1. This debt repayment option, governed by the Bankruptcy and Insolvency Act, is available to individuals in Manitoba with debts under $250,000 (excluding the mortgage on their principal residence) 12 13.

The Consumer Proposal process involves:

  1. Setting up a free, confidential consultation with a Licensed Insolvency Trustee (LIT) 21
  2. Preparing the Consumer Proposal based on the debtor’s income and assets 5 14
  3. Proposal reviewed and agreed upon by creditors who own the majority of the debt 8
  4. Debtor repays the agreed amount over a maximum period of 5 years 9 13
  5. LIT distributes payments to creditors until the proposal is completed 15

During the proposal, the debtor is required to attend two financial counselling sessions provided by the LIT to assist with budgeting and planning 16. Companies like David Sklar & Associates 2, MNP LTD 19 20, and Caplan Debt Solutions 22 23 offer Consumer Proposal services in Manitoba, providing free initial consultations and various debt relief solutions.

Benefits of Choosing a Consumer Proposal

Consumer Proposals offer numerous benefits to those struggling with unsecured debts in Manitoba:

  1. Debt Reduction: Consumer proposals can reduce debts by up to 80%, allowing individuals to repay only a portion of their total debts 3 9 13 14. This can result in significant savings on credit card interest rates and other unsecured debts 8.
  2. Affordable Monthly Payments: With a consumer proposal, individuals make one affordable monthly payment, which is negotiated with creditors 9 12. The payment terms remain fixed even if the individual’s financial situation improves, providing stability and predictability 9.
  3. Creditor Protection: Upon filing a consumer proposal, individuals are protected from collection efforts, including garnishments, lawsuits, and debt collector calls 3 5 9 10 11. This legal stay of proceedings stops all creditor actions, providing immediate relief and reduced stress 7 9.
  4. Asset Protection: Unlike bankruptcy, a consumer proposal allows individuals to keep all their assets, including their car and home equity 9 11 13 14. Manitoba law provides certain exemptions that protect many assets from seizure to pay debts 13 14.
  5. Interest Freeze: Interest rates are frozen as soon as the proposal is filed, providing immediate relief from increasing debt 7 9 10 18. This eliminates additional interest charges and administration costs 6.
  6. Flexibility: Consumer proposals offer tremendous flexibility in their design, allowing them to be tailored to an individual’s unique needs 6 10. Payments can be made over a maximum period of 5 years 7 9, and individuals have the option to pay off the proposal sooner if their circumstances change 10.
  7. High Acceptance Rate: Approximately 95% of Consumer Proposals are accepted as filed, and nearly 99% receive creditor approval 6. This high success rate provides individuals with a viable alternative to bankruptcy 3 6 8.
  8. Credit Rebuilding: A consumer proposal is not as detrimental to credit as bankruptcy, and individuals can begin rebuilding their credit even while making monthly payments 5. The consumer proposal settlement is noted on a credit history for only three years following completion 13 14.

Eligibility Criteria for Filing a Consumer Proposal in Manitoba

To be eligible for a Consumer Proposal in Manitoba, an individual must meet the following criteria:

  1. Be a Canadian citizen or a property owner in Canada 5.
  2. Be in a state of insolvency, owing at least $1,000 to creditors and being unable to repay debts as they come due 5 16.
  3. Have total unsecured debts (excluding mortgage on principal residence) between $1,000 and $250,000 5 7 8 11 14 15 16 17.
  4. Have sufficient income to make long-term monthly payments 5 17.
  5. Not have any other consumer proposal in progress or a previous proposal for the same debts that has been annulled 5.

The Consumer Proposal can only be filed through a Licensed Insolvency Trustee (LIT) 4 12 15 16. The LIT will assess the individual’s finances, determine if a Consumer Proposal is the best option, and help decide on a realistic monthly payment 5 13 18.

Other important eligibility factors include:

  • The proposal must be completed within five years 3 14 15.
  • The proposal must offer creditors more money than they would receive if the individual were to go bankrupt 5 15.
  • Only individuals, not businesses (unless sole proprietorships), can file a consumer proposal 7 15.
  • The individual must be a Canadian resident 19.
  • Debts cannot include student loans, alimony, maintenance, child support, fines, penalties, fraud, or misrepresentation 19.

If the proposal is ultimately rejected, the individual is free to pursue other means of getting relief from their debt 10 15.

How to File for a Consumer Proposal

To file for a Consumer Proposal in Manitoba, individuals must follow these steps:

  1. Schedule a free, confidential consultation with a Licensed Insolvency Trustee (LIT) 1 17. During this meeting, the LIT will assess the individual’s financial situation and determine if a Consumer Proposal is the best option 5 7 8.
  2. Prepare the necessary financial information, including a Statement of Affairs, a Statement of Income and Expense, an Assessment Certificate, and a Consumer Proposal 1 5. The LIT will help create a partial repayment plan based on the individual’s disposable income and total unsecured debts, ensuring the payment terms are greater than what creditors would receive in a bankruptcy scenario and realistic over the repayment period 5 25 26 27.
  3. Sign the official documents and register the proposal with the Office of the Superintendent of Bankruptcy 1 18. The entire process can be completed remotely 13. After filing, the first monthly payment should be made within 30 days, and the LIT will take over communications with creditors 1 19.

Creditors have 45 days to consider and vote on the Consumer Proposal 1 8 20 30. The voting process is weighted based on the amount of debt owed to each creditor 10. If more than 50% of creditors (by dollar value) vote ‘Yes,’ the proposal becomes legally binding 1 8 31. However, if more than 25% of creditors object, they can request a meeting with the debtor and other creditors to vote on accepting or rejecting the proposal 5 9.

To complete the Consumer Proposal, individuals must fulfill the payment terms and commitments, such as keeping taxes filed and attending two financial counselling sessions provided by the LIT 5 11 [33]. During the proposal, payments are made to the LIT, who then distributes the money to the creditors until the proposal is completed 14 [32]. At that point, the remainder of the eligible unsecured debt is discharged 15 [32].

Role of Licensed Insolvency Trustees

Licensed Insolvency Trustees (LITs) play a crucial role in the Consumer Proposal process, providing expert support and guidance to individuals struggling with debt 3. As government-licensed debt relief professionals, LITs are the only ones qualified to administer Consumer Proposals in Canada 19 20. Their extensive experience and knowledge in finance, law, accounting, and insolvency make them well-equipped to assist businesses and individuals in navigating financial difficulties 21.

When drafting a Consumer Proposal, LITs consider several factors to ensure the best possible outcome for their clients 19:

  • Affordability within the debtor’s budget
  • Likelihood of creditor acceptance
  • Offering unsecured creditors more than they would receive in a bankruptcy filing

Throughout the Consumer Proposal process, LITs manage all communication with the debtor’s creditors, ensuring that the debtor is protected from any direct contact 19. If a creditor reaches out to the debtor, they should immediately inform their LIT, who will handle the situation 12.

In addition to managing the financial aspects of the Consumer Proposal, LITs also provide valuable counseling and support to their clients 20. They often conduct the required financial counseling sessions, helping debtors build trust and rapport 13 14 15. Once the debtor has fulfilled all their responsibilities, the LIT issues the Certificate of Full Performance, releasing them from the debts owed at the outset of the process and signaling the beginning of their financial fresh start 16 17 19.

Real-life success stories demonstrate the positive impact LITs have on their clients’ lives:

  • Karen Johnson helped a person from Cranbrook manage their debt without filing for bankruptcy 18.
  • Monique Moore provided expert guidance and kindness to an individual from Burlington, ON during their bankruptcy process 18.
  • A person from Saskatoon, SK found MNP’s staff to be kind, friendly, and professional 18.

It is essential for individuals struggling with debt to seek professional help directly from a Licensed Insolvency Trustee to avoid receiving erroneous information or falling victim to profit-driven companies exploiting vulnerable consumers 19 27 28.

What Happens After Filing a Consumer Proposal

Once a Consumer Proposal is filed, several important events take place:

  1. Stay of Proceedings: Immediately after filing, a stay of proceedings is put into place, halting any collection actions by unsecured creditors and preventing new ones 25.
  2. Creditor Response: Unsecured creditors have 45 days to either accept the Consumer Proposal or request a meeting of creditors 17 25. If accepted by a simple majority, the proposal becomes binding on all unsecured creditors 17.
  3. Repayment Period: The maximum repayment period for a consumer proposal is 5 years 2 14. Payments can be made through monthly installments or a single lump sum payment, with the flexibility to pay off the Consumer Proposal early without penalty 25. Once the individual makes the final payment, they will receive a Certificate of Full Performance 27.
  4. Financial Counseling: Two financial counseling sessions are mandatory during the Consumer Proposal process, covering topics such as budgeting, managing money, and rebuilding credit 24 25. These sessions focus on financial education and money management 24.
  5. Debt Management: Consumer proposals can manage various types of debt, including:
    • Car loans
    • Cellphone debt
    • Credit card debt
    • Lines of credit
    • Medical debt
    • Mortgage debt
    • Payday loan debt
    • Secured debt
    • Student loan debt
    • Tax debt
    • Utility bill debt 3

However, secured debts, like mortgages and auto loans, must still be paid 25.

  1. Credit Impact: Filing a Consumer Proposal affects your credit report 25. A Consumer Proposal will be reflected on an individual’s credit history report for three years after the date they finish their proposal or six years from the date their proposal started 27. However, individuals can start improving their credit history and score as soon as their Consumer Proposal is completed 27. Improving credit score involves maintaining a low credit utilization rate, paying bills on time, paying off debt more often, paying more than the credit card minimum every month, and not applying for more credit cards or accounts 2.

It’s important to note that missed payments can lead to the annulment of the consumer proposal 2. However, increasing income does not affect the repayment amount in a consumer proposal 2. Support is available across Canada, with a free repayment calculator available online 3. A person from Chilliwack, Abbotsford, or Hope, BC can take advantage of a free assessment to understand their debt relief options 26.

Success Stories: Consumer Proposal in Action

Consumer Proposals have helped numerous individuals and families across Canada overcome their financial difficulties. Here are some real-life success stories that demonstrate the effectiveness of this debt relief option.

Tips for a Successful Consumer Proposal

Here are some tips for a successful Consumer Proposal in Manitoba:

  1. Attend the required financial counseling sessions:
    • The first consultation meeting focuses on budget management and spending habits 7.
    • The second consultation meeting covers the causes of money problems and managing finances 7.
  2. Make regular payments towards the agreed-upon amount until the debt is fully repaid 8. Individuals are required to make regular payments towards their debts over an extended period 8.
  3. Be aware of the potential drawbacks:
    • Consumer proposals can have a negative impact on your credit score 8.
    • Not all creditors may agree to the terms of the consumer proposal 8.
    • There are fees associated with these services 8.
  4. Keep all documents related to the Consumer Proposal, including the Notice of Consumer Proposal, Certificate of Full Performance, and Final Statement of Receipts and Disbursements 27.
  5. Rebuild your credit after the Consumer Proposal:
    • Obtain copies of your credit reports from both Equifax and TransUnion 27.
    • Pay all bills on time 27.
    • Get new credit and use it responsibly 27.
    • Check for errors in your credit reports 27.
  6. Understand the costs:
    • The cost of a Consumer Proposal varies based on the amount owed, assets owned, income earned, and other factors 11.
    • Meeting with a Licensed Insolvency Trustee is the best way to get an estimate 11.
    • Caplan Debt Solutions offers a Consumer Proposal Calculator to help understand potential savings 12.
  7. Compare Consumer Proposal to other debt solutions:
    • Consider Credit Counselling, Debt Consolidation, and Repaying Debt on Your Own 13.
    • Discuss the pros and cons of each option with a Licensed Insolvency Trustee 4.


In conclusion, Consumer Proposal Services in Manitoba offer a valuable debt relief option for individuals struggling with unsecured debts. By working closely with a Licensed Insolvency Trustee, Manitobans can create a manageable repayment plan tailored to their unique financial situation, potentially reducing their debt by up to 80%. This legally binding process provides immediate relief from creditor actions, interest freezes, and the flexibility to protect assets while rebuilding credit.

As demonstrated by the success stories shared, Consumer Proposals have helped countless individuals and families overcome their financial difficulties and achieve a fresh start. By understanding the eligibility criteria, filing process, and tips for success, those considering a Consumer Proposal in Manitoba can make an informed decision about their financial future. With the expert guidance and support of Licensed Insolvency Trustees, Manitobans can take control of their debt and pave the way for a brighter financial future.


1. How does the process of a consumer proposal operate in Manitoba? In Manitoba, a consumer proposal becomes legally binding once the majority of your creditors, by debt amount, approve your repayment plan. Once approved, you are obligated to repay the agreed-upon amount over a period that can extend up to five years.

2. What are the potential drawbacks of filing a consumer proposal? One of the main disadvantages of a consumer proposal is that it typically takes longer to complete than declaring bankruptcy. While it allows for lower monthly payments, this also means you’ll be in debt for a longer period. However, you do have the option to pay off the proposal early if your financial situation improves. It’s also important to note that a consumer proposal will affect your credit rating.

3. What should I understand about consumer proposals before considering one? A consumer proposal is a legal agreement for debt settlement between you and your creditors, facilitated by a Licensed Insolvency Trustee. The trustee helps you figure out how much debt you can realistically repay and then sets up a payment plan that your creditors need to approve.

4. Is the Canada Revenue Agency (CRA) amenable to consumer proposals? Yes, the CRA does accept consumer proposals. Since CRA tax debt is considered unsecured debt, it can be included in your proposal along with other unsecured debts like credit card balances, lines of credit, and payday loans. All unpaid taxes owed to the CRA up to the date you file your proposal are eligible, including income tax debt and GST/HST credits.


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