Manitoba Consumer Proposal
After many years in which the residents of Manitoba had some of the lowest borrowing rates in Canada, recent statistics indicate that things may be changing. In 2010, residents of Manitoba had one of the lowest levels of debt per capita in the entire country. During the same year, Manitoba also had the smallest growth in the number of residents enrolling in consumer proposals and other debt solutions. This apparently indicated a disinclination to take on new credit card debt, installment loans and other forms of consumer indebtedness, thereby contributing to the overall economic health of the province.
At the beginning of 2013, however, it seemed Manitoba’s reluctance to take on new consumer debt was fading away. During 2012, the average amount of consumer debt per capita increased by 8 percent, which is an incredible change according to historical standards. Many economists attribute this to low interest rates on consumer debt as well as the availability of credit to many borrowers.
An excessive amount of consumer debt, we must remember, is a threat to one’s long-term financial health even if the interest rate charged on it is relatively small. As debt increases, so does the likelihood of default. That is why so many Manitobans are turning to debt solutions like the consumer proposal.
What Is a Manitoba Consumer Proposal?
To understand the consumer proposal, Manitoba residents must first know that it is a binding legal agreement between a debtor and his or her creditors. Under a consumer proposal, a debtor hires a licensed bankruptcy trustee to draw up a contract between borrowers and lenders that sets up a payment plan that will allow the borrower to eliminate his or her debt. What sets this plan apart from paying the minimum payments to your creditors on your own is the fact that a consumer proposal often includes freezing your interest payments and an agreement that your creditors will consider your debts paid in full for less than what you actually owe.
The consumer proposal is binding on all your creditors once creditors who hold a simple majority of your debt (51 percent) agree to it. If you neglect to follow the terms of your consumer proposal, you forfeit much of the protection and debt reduction that it provides.
Is a Manitoba Consumer Proposal Right for Me?
The answer to this question depends on a variety of factors. First, your total debt must be less than $250,000 ($500,000 for married couples). Second, you must demonstrate that you cannot make the minimum monthly payments on your bills.
Even if you meet the above requirements, you may not want to submit a consumer proposal to your creditors. Manitoba residents who fear the effects of bankruptcy, for example, experience the same harm (or close to the same) to their credit as a bankruptcy under a consumer proposal in Manitoba. On the other hand, a consumer proposal is superior to a bankruptcy in that it protects your assets from seizure. Another advantage of a consumer proposal is that your bankruptcy trustee is often able to negotiate greater principal and interest reductions than you could on your own. However, a Canadian debt settlement program can often get the same or better reductions for you without such a severe impact on your credit that you suffer under a consumer proposal.
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This has only been a short overview of the consumer proposal and its advantages and disadvantages. To receive more information, fill out the online debt relief form and learn more about other debt solutions.
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