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NWT Consumer Proposal

The average Canadian’s consumer debt continues to increase almost yearly. If this continues over time, residents may find themselves in over their heads when it comes to their debt. Moreover, some may already find themselves buried under a mountain of debt that they will not be able to pay off through ordinary means. Extraordinary difficulties call for extraordinary measures, which is why so many are choosing to submit a consumer proposal in the Northwest Territories (NWT). In fact, between August 2021 and 2022, , the Office of the Superintendent of Bankruptcy reported that NWT saw a 53% increase in consumer proposals.

Explaining the Northwest Territories Consumer Proposal

The last debt solution that can be attempted in Canada before filing for bankruptcy is known as a consumer proposal. Northwest Territories residents who go the consumer proposal route enter into a legal agreement with their creditors to pay off their debt. This is done via a licensed bankruptcy trustee, who helps the consumer put together a proposal and then submits it to one’s creditors. If the creditors accept it, payment is made either in installments or in one lump sum to eliminate the debt.

Why does a consumer proposal in the Northwest Territories help people who otherwise could not pay off their debt? The answer is that in putting together the consumer proposal, the bankruptcy trustee negotiates with creditors to settle debts for less than what is actually owed and in most cases your interest stops accumulating on the remaining debt. Thus, the consumer pays much less to settle his or her debt than he or she would without a consumer proposal. Only Canadians who owe less than $250,000 ($500,000 for married couples filing a joint consumer proposal) qualify for this debt solution.

Northwest Territories Consumer Proposal Pros and Cons

The consumer proposal offers several advantages:

• Your assets are secured and cannot be seized by creditors.
All of your creditors must agree to the proposal if creditors representing at least 51 percent of your debt agree to it.
• Debt collectors must stop calling you.

At the same time, a consumer proposal has key disadvantages:

• It has the same negative impact on your credit as a bankruptcy, effectively limiting you from new credit for up to seven years.
• If creditors holding 51 percent of your debt decline the consumer proposal, it does not go through, which means you may not get the favourable settlement totals offered by the creditors who did agree to the proposal.

Find Out More

Not everyone will benefit from a consumer proposal. Northwest Territories residents who would like to know more about this option or who believe there is a better option for them should fill out the debt relief application form for more information.

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