Manitoba Consumer Proposal FAQs

If you have any questions about Consumer Proposals take a look at our FAQ.

What is a Consumer Proposal?

A Consumer Proposal is a Canadian debt relief program. It is a proposal that you and your Licensed Insolvency Trustee create and present to your creditors. In your proposal, you may ask to reduce the amount of money you owe, increase the time in which you have to pay, or both.

Should I file a Consumer Proposal?

If you are struggling with debt, a Consumer Proposal can help to solve your money issues without having to declare Bankruptcy. A Consumer Proposal allows you to keep your assets (like your house, boat, and car). If you are considering a Consumer Proposal, reach out to a Licensed Insolvency Trustee to see if it is the right debt relief solution for you.

Do I qualify for a Consumer Proposal?

To qualify for a Consumer Proposal, you must owe less than $250,000 (excluding the mortgage on your primary residence). Your proposal must be filed through a Licensed Insolvency Trustee.

What other options do I have if I don’t qualify for a Consumer Proposal?

If you don’t qualify for a Consumer Proposal, there are other debt management options available including Bankruptcy and Credit Counselling.

What debt is included in a Consumer Proposal?

Unsecured debt is debt that is not backed by collateral and is included in a Consumer Proposal. Unsecured debt that can be eliminated in a Consumer Proposal includes:

  • Credit card
  • Personal loan
  • Lines of credit
  • Payday loan
  • Student loans (if you’ve been out of school for more than 7 years)
  • Tax debts

What are the benefits of a Consumer Proposal?

A Consumer Proposal:

  • Helps to get you out of debt
  • Requires that you to pay at least a portion of your total debt
  • Allows affordable payments, based on your ability to pay, rather than the amount you owe.
  • Gives you more time to repay your debts
  • Eliminates further interest charges and penalties
  • Prevents or stops garnishment and all other collection practices from unsecured creditors
  • Can help you build a new financial future

How much of my debt will be eliminated with a Consumer Proposal?

In a Consumer Proposal, you can offer to pay your creditors a portion of your debt or all of your debt over a specific period of time. Your payments are typically determined based on three criteria including how much you earn, how much your assets are worth, and your creditors. All of your unsecured debt will be eliminated, regardless of what percentage of the debt you have paid through the proposal. If you are considering a Consumer Proposal, speak to a Licensed Insolvency Trustee.

Manitoba Consumer Proposal FAQ

Click the blue plus icon on the right to read the answer to the other Manitoba Consumer Proposal FAQ.

It is up to you to decide which Licensed Insolvency Trustee (LIT) is the right fit for you. However, there are advantages to working with a local LIT versus a larger national firm. With a national firm, it is not uncommon for your Consumer Proposal to be outsourced to another province. This does not happen at your local LCTaylor firm.

At LCTaylor, we are intimately familiar with the unique court rulings and exemptions in this province and with all of the Manitoba tax regulations and credits you may be entitled to. As well, knowing the creditors involved can be important in filing a successful Consumer Proposal, since the creditors are allowed to vote on whether or not the proposal is accepted. As a local Trustee, who has worked for decades in Manitoba, we are familiar with the requirements and attitudes of local creditors. Our entire staff is located in one building in Winnipeg where they work as a team to ensure you receive the best debt services Manitoba has to offer.

Part of the Consumer Proposal process requires you to attend two financial counselling sessions provided by your LIT. These sessions will assist you with budgeting and financial planning.

If you miss three payments, your Consumer Proposal is automatically annulled and your debts are reinstated. At this time, your creditors can resume collections, including garnishment.

Yes, virtually all of your tax debt can be included in a Consumer Proposal, including outstanding GST. However, source deductions that you have collected and the tax owed in the year in which you file the proposal, may not be discharged, depending on the circumstances. This is something you will want to discuss in depth with your LIT.

The amount a Licensed Insolvency Trustee is paid for administering a Consumer Proposal is federally regulated and therefore, is the same across Canada. All costs associated with the Consumer Proposal come out of the monthly proposal payments. You do not have to pay separate fees outside of your monthly payment.

A Licensed Insolvency Trustee (LIT), is the only professional authorized in Canada to administer a Consumer Proposal. An LIT is a federally regulated professional who can provide information on debt management options and help you to make an informed decision about your debt.

If you file a Consumer Proposal, your assets, including your house and car, are protected from your unsecured creditors. However, you are still responsible for making your mortgage and/or car payments.

Yes, a Consumer Proposal can be rejected. After you file your proposal, creditors have 45 days to either accept or reject the proposal. If your proposal is rejected, a meeting will be held, at which your Licensed Insolvency Trustee, with input from both you and your opposing creditor(s), can attempt to find a compromise. If a compromise is not reached, a Consumer Proposal will not be possible, and you can consider other ways of dealing with your debt, including Bankruptcy.

The biggest difference between filing a Consumer Proposal and Bankruptcy is that you get to keep more of your assets in a Consumer Proposal. A Consumer Proposal involves renegotiating the terms of your debt repayment with your creditors. In Bankruptcy, you surrender any non-exempt assets in exchange for the elimination of your debts. A Licensed Insolvency Trustee can help you to determine which debt management solution is right for you.

A Consumer Proposal is an option for those with debt less than $250,000 (excluding primary mortgage). A Division 1 Proposal is designed for people with debt over $250,000 (excluding primary mortgage) or for corporations. Unlike a Consumer Proposal, if a Division 1 Proposal is not accepted by your creditors, you will automatically become bankrupt.

There are some debts that are not included in either a Consumer Proposal or a Bankruptcy. They are alimony and child support, fines and penalties of a court, debt that is the result of fraud or misrepresentation, and student loans that are not more than 7 years old.

Also, secured debts are not included in a Consumer Proposal. Secured debt is backed by some sort of asset or collateral. Examples of secured debt include your mortgage or car loan. If you file a Consumer Proposal, you can keep your home, car, or other assets, as long as you maintain your payments to the creditor that has security on them.

However, if you feel that you cannot afford to continue payments on an asset, the Consumer Proposal provides an excellent opportunity for you to relinquish that asset back to the secured creditor, and have any debt still owing to that creditor (the residual), included in the proposal. For this to happen, the decision would need to be made before filing the proposal so that that residual debt could be included in the proposal.

Equifax removes a Consumer Proposal from your credit report three years after your proposal is completed. For TransUnion, the Consumer Proposal will stay on your credit report for either three years after completion of the proposal, or six years after you signed the proposal – whichever is sooner.