How Can A Consumer Proposal Or Bankruptcy Help Prevent You From Being Evicted?

How Can A Consumer Proposal Or Bankruptcy Help Prevent You From Being EvictedIn the current financial climate, it’s no secret that the cost of living is increasing at an alarming rate. The situation is particularly challenging for those who are renting their homes, especially in areas like Winnipeg and the rest of Manitoba. For instance, the average rent for a one-bedroom unit in Winnipeg has seen an 8.3% increase from June 2022 to June 2023. This surge in rental costs is happening in conjunction with a period of high inflation. However, there is a silver lining to this seemingly bleak situation – the mechanisms of a Consumer Proposal or Bankruptcy. Let’s explore this in detail.

The Landlord’s Perspective

Landlords are not immune to these financial pressures as the price of construction materials, labor, supplies, and other costs related to building and maintaining rental properties have skyrocketed. Many landlords resort to passing these costs to their renters through regulated or unregulated rent increases.

In addition, the majority of rental properties are debt-financed, meaning rising interest rates exert additional pressure on landlords to increase home rental prices. Failure to do so risks their collected rent falling short of the amount needed to cover mortgage payments on the property.

The Renter’s Perspective

From the renter’s perspective, this is happening at a time when they are facing pressures on their household budget beyond rent. The overall cost of living continues to climb, with the Manitoba Consumer Price Index showing inflation of 3.4% between May 2022 and May 2023. This situation has led to calls for more rent control and laws that would enhance renter’s rights.

Despite these concerns, there are no planned changes to the Residential Tenancies Act, the Landlord and Tenant Act, or other tenant law that would result in set maximum rent increases in Manitoba to help renters’ budgets.

The Predicament

Both landlords and renters are being squeezed by the rising costs involved, making it challenging to find a solution that’s fair to both. As such, it appears that the status quo will continue for the foreseeable future.

Reassessing Your Budget

If you are having difficulty making rent or occasionally making late payments, it’s time to examine your overall financial picture. There are not many expenses in life more essential than your rent payment, as failure to make it means eventual eviction and great upheaval for you and your family.

With that in mind, it may be necessary to scrutinize your budget for less important items that can be cut back on to ensure that your rent payments are made.

Exploring Your Options

If you are carrying debt, one of your most significant monthly costs might be the payments that you are making on that debt. If you are having trouble finding enough room in your budget for your rent and other monthly living expenses as well as your debt payments, you should consider your options.

This can be done by asking your creditors to extend the repayment terms to make each monthly payment smaller or by requesting that they reduce the interest rate that you pay on your debt.

Another option may be to move your loan to another financial institution that offers you more favorable terms. While you may be successful, it is also possible that you will be unable to arrange better terms for your debt by negotiating directly with lenders, especially in the present environment of increasing interest rates.

Getting the Help You Need

If you cannot get better terms on your own, it might be time to have a proactive conversation with a Licensed Insolvency Trustee (LIT) by contacting us at Bankruptcy Canada. If a Consumer Proposal or Bankruptcy is appropriate, the LIT can suggest an option that will make your payments more reflective of what you can afford rather than what you owe.

By making your debt payments more manageable before you get to the point of falling behind on your rent, you will hopefully be able to keep on top of your rent payments going forward so that there is no threat of eviction.

Can Bankruptcy or a Consumer Proposal Deal with Rent Arrears?

If you’re reading this while currently behind on your rent payments and facing eviction or the threat of it, you might be wondering if a Bankruptcy or a Consumer Proposal will deal with those rent arrears and allow you to stay in your home.

The answer to this question seems to vary by province, so we will refer to the current policy (as of July 2023) of the Residential Tenancies Branch of Manitoba.

Their policy document states that when a tenant has filed a Bankruptcy, the Residential Tenancies Branch may still grant an order of possession (a document a landlord can use to force a tenant to move out) for rent owed from before the Bankruptcy.

On the other hand, if a Consumer Proposal has been accepted, or has been filed and the creditors’ decision regarding acceptance or rejection is still pending, the Branch cannot grant an order of possession for rent owed from before the date of the proposal.

Of course, the tenant must pay future rent as it becomes due after the filing of a Consumer Proposal, or the landlord would be able to apply for an order of possession for the non-payment of the amounts due post-proposal.

Reaching Out Sooner Rather Than Later

It would be wise to seek the advice of a Licensed Insolvency Trustee if you are having difficulty making your rent payments, regardless of whether or not your situation has gotten to the point where you are facing eviction. That said, it is usually best to reach out to one of our debt solution professionals as soon as you believe that your debt may be becoming a problem.

That is particularly true in the situation of a renter. If you are able to solve your debt issues before they start to impact your rent payments then your relationship with your landlord won’t be harmed. They won’t know that making rent was ever an issue for you.

Act Now!

If you are a renter with debt that feels like it may become unmanageable, then be proactive and email us or call us today to find out what options exist that may provide relief.

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