Navigating unmanageable debt can feel like a lonely journey, especially in a city like Winnipeg where the cost of living continues to be a concern for many. While bankruptcy often comes to mind as the only solution, a consumer proposal is a powerful and increasingly popular alternative. It's a formal, legally binding agreement between you and your unsecured creditors that can significantly reduce your debt and provide a clear path to a fresh start.

What is a Consumer Proposal? ?

A consumer proposal is a government-regulated process administered by a Licensed Insolvency Trustee (LIT). It's an offer to your creditors to repay a portion of what you owe, or to extend the time you have to pay, or both. Unlike an informal debt settlement, a consumer proposal is legally binding on all your unsecured creditors once it is accepted by a majority of them (by dollar value of the debt). This means that if creditors representing more than 50% of your debt agree, all of your creditors are bound by the terms of the proposal.

The process is designed for individuals who owe less than $250,000 (not including a mortgage on a primary residence) and have a stable income to make a reasonable monthly payment.

Key Advantages of a Consumer Proposal ?

Choosing a consumer proposal over other debt relief options, including bankruptcy, offers several distinct benefits:

• Keeps Your Assets: A major advantage is that you get to keep all your assets, such as your home, car, and investments, as long as you continue to make your secured debt payments (e.g., your mortgage or car loan). In a bankruptcy, you may be required to surrender some of these non-exempt assets.

• Stops Creditor Actions: Once your proposal is filed, a "stay of proceedings" is automatically put in place. This means all collection calls, wage garnishments, and lawsuits from your unsecured creditors stop immediately. The LIT handles all communication with them, giving you immediate relief from financial stress.

• Reduced Debt and Frozen Interest: A consumer proposal can reduce your total unsecured debt by a substantial amount—often by a significant percentage. Even better, all interest charges are frozen from the moment you file, ensuring your debt won't grow while you're making payments.

• A Clear End Date: The payments are consolidated into a single monthly amount that you make to the LIT, for a period that cannot exceed five years. Once all payments are complete, the remainder of your unsecured debt is legally forgiven, giving you a clear timeline to becoming debt-free.

How to Get Started in Winnipeg ?

The first step is to schedule a free, confidential consultation with a Licensed Insolvency Trustee (LIT) in Winnipeg. An LIT is a federally regulated professional, and the only person legally authorized to file a consumer proposal. They will review your financial situation, explain all your options (including a consumer proposal, bankruptcy, or credit counseling), and help you determine the best path forward for your unique circumstances. It's an opportunity to get expert advice without any obligation.