Frequently Asked Questions

You have questions? We have answers.

Debt can be overwhelming and confusing, but it doesn't need to be. Our Licensed Insolvency Trustees have answered the Frequently Asked Questions we've been asked about Bankruptcy, Consumer Proposals and other debt relief options.

Bankruptcy FAQ's

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Consumer Proposals FAQ's

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Credit Counselling FAQ's

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Debt Consolidation FAQ's

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Orderly Payment of Debts FAQ's

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Informal Debt Settlements FAQ's

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General Debt FAQ's

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What is a Licensed Insolvency Trustee?

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Bankruptcy Discharges FAQ's

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Debt Relief FAQ

The first step in combating debt is to analyze where you are spending your money. If you see a clear way to stop incurring more debt and t​ake action immediately to consistently spend less, you may be able to regain control on your own. However, if yo​ur financial troub​les persist, an MNP Trustee can discuss different options with you such as Consumer Proposals, Bankruptcy or​ put​ you in contact with a Credit Counselling organization during our free confidential consultation.​

A Consumer Proposal is for individuals that still have a source of income and are able to make payments to creditors, but need to change the arrangement of their payments. A Consumer Proposal can change the length of payment (up to a maximum term of 5 years) and the overall amount the debtor is required to pay. Whereas a bankruptcy can be considered a clean start, as debts to unsecured creditors are typically forgiven. A bankruptcy lowers your credit rating to the lowest score (R9), while a Consumer Proposal has less impact on your rating (R7).

Consumer Proposal VS. Bankruptcy

Consumer Proposals and bankruptcies are both government legislated options which can provide you with relief from significant debt problems. In addition, both debt solutions can only be administered by a Licensed Insolvency Trustee and provide a legal stay of proceedings which require creditors to discontinue harassing collection calls, garnishment or other legal proceedings.

Determining which, if either, option is an appropriate solution in your own unique situation depends on a number of variables. Let’s explore the advantages and disadvantages of both a Consumer Proposal and a bankruptcy.

Consumer Proposal VS Bankruptcy

Bankruptcy isn't the only option. Numerous solutions including a Consumer Proposal and other options may be available. Our Debt Calculator can provide an idea of the best debt solution for you or you can contact an MNP office today to discuss your options with a Trustee.

  • My wages are being garnished to pay for my outstanding debts.
  • I am afraid to answer the phone because it may be a debt collector calling.
  • My creditors are threatening to sue me, repossess my personal property, or hire a collection agency to recover their money.
  • I have been borrowing money for household expenses from friends and family to make it from one pay cheque to the next.
  • I am paying one creditor one month and another one the next because I don’t have enough money to pay them both.
  • My financial problems are affecting my health, my job and/or my marriage.
  • I am going over my spending limit or using credit cards as a necessity, instead of a convenience.
  • I am only making the minimum payment on my credit card balances.
  • I have been receiving second notices about overdue accounts.
  • At least one utility company cut off service because of my outstanding bills.
  • I spend 20% or more of my take-home pay on loans and credit card debt payments.
  • I am paying overly high interest or service charges because I don’t pay my bills on time.
  • I am renegotiating loans to cut monthly costs, or looking for a debt consolidation loan to pay off old bills and a few new ones.

Insolvency is a formal term from bankruptcy law. If you are insolvent, it means your liabilities or debts exceed the value of your assets. You would also be considered insolvent if you are unable to pay your debts on time. This is an important consideration in financial analysis and credit matters.

Licensed Insolvency Trustees (LITs) are highly qualified debt professionals who are federally regulated. Licensed through the office of the Superintendent of Bankruptcy, LITs adhere to a firm code of ethics and strict government regulations. As such, Licensed Insolvency Trustees are the only professionals who can file Consumer Proposals and bankruptcies on behalf of both individuals and corporations.

The role of a LIT is to do a thorough review of your unique financial situation and to ensure that your rights are not abused while protecting the rights of your creditors.

In order to best protect consumers and corporations struggling with insolvency, the Office of the Superintendent of Bankruptcy has indicated that they will be more aggressive in sanctioning parties who attempt to identify themselves as providing the same services as Licensed Insolvency Trustees without in fact being licenced to do so. Anyone can offer debt relief advice or services in Canada but not all are licensed by the federal government to act as a Licensed Insolvency Trustee.

There are several differences between a Licensed Insolvency Trustee and an unlicensed debt consultant. These include:

  • LITs can file for a Consumer Proposal
  • LITs are able to file a bankruptcy
  • Trustees are federally regulated and licensed
  • An LIT’s education is regulated by the government
  • LITs have regulated fees

Our team of Licensed Insolvency Trustees will help you explore the debt relief options available to you and together we will find the solution that best fits your situation. Set up your FREE, no obligation consultation today.


MNP is committed to protecting your privacy. We promise to keep all of the information you share with us confidential.

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