Do I Need to File a Consumer Proposal?

2015-09-24

Jeane Herman

You might ask yourself why you would need to file a Consumer Proposal, or possibly even look at filing for bankruptcy? Listening to the Statistics Canada announcement on September 11, 2015 regarding the level of Canadian’s household debt could be one reason.

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Statistics Canada announced that household debt in Canada is at the highest level even when measured as a portion of disposable income in 2015’s second quarter. The ratio of household credit market debt to disposable income rose from 163% in Q1 to 164.6% in Q2. This means that for every dollar of disposable income households brought in, they owed almost $1.65.

Currently the low interest rates in Canada are encouraging us to use credit. Over the long term however, as we use more credit, we have less disposable income for the things we need and therefore end up using more credit to extend our spending each month.

Have you looked at your creditor card statements lately? How long will it take you to pay off the debt if you only make the minimum payment?

What are your plans for retirement? Do you know what your retirement income will be? If you have no savings and do not belong to a pension plan though work, you will be relying on government funding from CPP and OAS during your retirement years. The time to plan for retirement is before you retire, which means the time to deal with debt, is while you are still working.

If you find yourself unable to make a dent on the debt you are carrying, filing a Consumer Proposal to your creditors will help relieve financial stress and put you on track to prepare for retirement.

A Consumer Proposal is a payment plan made by a debtor to his or her creditors. This payment plan will consolidate your unsecure debts and enable you to formulate a monthly payment plan and / or lump sum payment to satisfy your unsecure debt. This can either be for the full amount of the debt or for portion of the debt and will depend on your circumstances.

A Trustee in Bankruptcy is licenced to file Consumer Proposals and is called the Administrator. You file a Consumer Proposal with the help of the Administrator. They will in turn, notify creditors of the Consumer Proposal and work with you to negotiate with your creditors.

When a Consumer Proposal is filed, the unsecured creditors will not be able to take legal steps to recover their debts from you while you are preforming the terms of the proposal. This protection is lost if the proposal is withdrawn, rejected or annulled or if the proposal is not fully performed and the administrator is discharged. There are some exceptions to debts that can be included and released by a proposal, for further information on Consumer Proposals contact a local Trustee in Bankruptcy.

When a Consumer Proposal is completed by the full performance of the terms of the proposal, you will be issued a certificate of full performance and you will be relieved of the debts that were in the proposal.

Financial freedom is attainable. Rather than struggling when you retire, start now to look after your debts, set your goals and plan for your future.

Jeane Hermanis is a Bankruptcy Trustee within our Kelowna and Vernon locations. To learn more about how MNP Debt can help you, contact our local office at 250.979.2580 or 250.542.0871