Consumer Proposal Process in Winnipeg

Whether there are hot temperatures or snow drifts, Winnipeg, Manitoba, is never short on fun activities. You can explore the shopping and entertainment district of The Forks Market and the intricate ice sculptures featured at Festival du Voyageur. No matter how much there is to keep you occupied, the stresses of financial debt can be debilitating enough to ruin your experiences. Winnipeggers can find solace in knowing there are debt relief options to aid their struggles. Consumer proposals have become one of the most effective ways to reduce debt for people around Canada.

What Is a Consumer Proposal?

A consumer proposal provides relief to those experiencing debt problems. Unlike other options, such as a debt consolidation plan, a consumer proposal is a binding legal agreement between a debtor and its creditors. Licensed Insolvency Trustees are the only ones legally allowed to administer and arrange a consumer proposal on your behalf. 

During the consumer proposal process, your Licensed Insolvency Trustee will work with you to create an offer to pay your creditors a specific portion of the debt you owe them. Along with reducing your debt, your Trustee can also arrange for you to keep your assets, such as RRSPs, GST credits, and tax refunds. Once the consumer proposal has been created, your creditors will vote on whether they accept or reject the terms of the agreement. If the terms are accepted, you will repay a portion of your debt with zero interest. 

When a consumer proposal is filed, you are legally protected against collection calls and harassing phone calls from creditors. You can complete a proposal in five years or less. You will pay the agreed-upon amount to your Licensed Insolvency Trustee every month. Your Trustee will then use the money to repay your creditors what you owe. Once the set amount has been paid, the rest of your debt will be cleared.

However, when filing a consumer proposal, you will have responsibilities to take care of:

      • Provide your Trustee with a detailed list of your assets, such as your properties and debts. 
      • Attend the meeting of creditors if requested. 
      • Begin to make monthly payments to your LIT.
      • Adhere to the agreement terms made in your consumer proposal. 
      • Attend two credit counselling sessions either in-person or online through video conferencing. 
      • Report any changes in your financial situation to your Trustee. 

Refusal to follow the terms of the agreement will forfeit your debt relief benefits and protection from creditors. If your proposal has been rejected, your LIT may recommend other debt solutions, such as bankruptcy.

The Advantages & Disadvantages of Consumer Proposals

There are several advantages and disadvantages involved when filing a consumer proposal, such as:


  • A proposal can decrease your debts.
  • You won’t have to declare bankruptcy. 
  • A consumer proposal may be a better option compared to debt consolidation. 
  • Every payment is what you can afford. 
  • You can complete your consumer in less than five years if you choose to make your payments faster. 
  • A proposal can freeze the interest on your debt. 


  • Your proposal will become part of a public record.
  • Your consumer proposal can get rejected by your creditors. 
  • Missing three or more payments may mean you have to file for bankruptcy as an alternative.
  • Secured debts are not included in a consumer proposal, unless you choose to hand back the asset.
  • Your credit will be affected.

    How Does a Consumer Proposal Affect My Credit?

    Entering into a consumer proposal will appear on your credit report for a maximum of six years from the date you filed. If you complete your proposal sooner, the length of time will decrease. Once your payments are complete, you will notice a credit rating of R7 on your report. This indicates that you have completed the process of paying your creditors through a third party (LITs). 

    However, making payments outside of your consumer proposal, such as a car loan, will be reported separately. Maintaining a good payment history on your secured debts can help you rebuild your credit.

    Avoid Getting Ripped Off

    Today, a growing number of debt relief companies and credit counsellors are taking advantage of clients searching for ways to get out of debt. These companies will promote consumer proposals as part of the services they provide, overwhelm clients with numerous fees, and refer them to LITs who would have given them a free consultation in the first place. 

    Remember that only a Licensed Insolvency Trustee can legally file and administer a consumer proposal for you. LITs are the only ones that can provide these services, and the fees they charge for doing so are set by the federal government. 

    Living with debt can be challenging. Don’t wait to make a change. Look into the debt relief benefits that a consumer proposal can provide. Make an appointment with a licensed insolvency trustee in Winnipeg today and receive a free consultation to discuss all your options.


    What Happens When You File a Consumer Proposal?

    Your Licensed Insolvency Trustee will file the proposal with the Office of the Superintendent of Bankruptcy (OSB). After filing, any payments you have to make with your creditors will be halted. If there are any legal actions relating to the debt you may be facing, they will be stopped as well.

    A report will be submitted to the creditors, which outlines your situation and the cause of your debt problems. The report will include your LIT’s opinion on whether the proposal should be accepted.

    How Much Debt Do You Need for a Consumer Proposal?

    To file for a consumer proposal, you must owe at least $1,000 in unsecured debt to qualify. It’s important to know how much you have in total debt. To qualify as a single individual, the maximum debt that you can have is $250,000. As for married couples, you can owe up to $500,000 together.

    Do Most Consumer Proposals Get Accepted?

    When a proposal is filed, your creditors will have 45 days to vote on whether they accept or reject the consumer proposal. If there’s no meeting of creditors requested, that means that the proposal will be accepted by the creditors and binds all of those creditors under the consumer proposal terms, even those that didn’t vote before the deadline.

    For a meeting of creditors to be held, creditors owed at least 25% of the total value of the proven claims, as filed on the 45th day after the initial proposal was filed, must request a meeting. LITs can also be directed by the Office of the Superintendent of Bankruptcy (OSB) to call for a meeting of creditors during the same time frame. A meeting of creditors must be held within 21 days after being called. The creditors will then vote to either accept or reject the proposal, or request that you make a change to the proposal terms. If the majority of the creditors vote to accept the proposal either as it was originally filed, or following a change to the terms, then the proposal will have been approved.

    If the consumer proposal was not accepted, you may also have to consider other debt consolidation options or declare bankruptcy.

    What Is the Difference Between Consumer Proposal & Bankruptcy?

    A consumer proposal is a binding agreement made between you and your creditors. This proposal is administered by an LIT, who helps negotiate the terms of your debt repayment. The legally binding agreement protects you from debt collectors and can freeze the accumulated interest.

    Bankruptcy is a legal process that relieves you of the debts you’re facing in your financial situation. You can get a free consultation with an LIT to go over your debt-relief options; in this appointment, a Trustee will discuss if bankruptcy might be your best option. Filing for bankruptcy will show on your credit history for six years following your discharge from the process, but the process of bankruptcy can be accomplished in as little as nine months.

    There are some differences involved between these two alternatives, such as:

    • With bankruptcy, you will have to submit monthly reports on your income and expenses. Consumer proposals don’t require any reporting duties.
    • Consumer proposals allow you to keep all of your assets, while bankruptcy may require you to surrender any non-exempt assets.
    • The duration varies for these two debt solutions, with consumer proposals taking up to 5 years and bankruptcy taking as little as 9 months.
    • The cost associated with consumer proposals is covered as you make your monthly payments. If you’ve declared bankruptcy, the cost involved will depend on your average monthly income, and is calculated specifically for each case.
    • Consumer proposals will show for no longer than 6 years on your credit score (sometimes less), where bankruptcy can remain on your history for 6-7 years.

    Will a Consumer Proposal Affect My Credit Rating?

    If you’ve filed a consumer proposal, it will show on your credit report. The proposal will be removed after three years from the date you have completed the proposal or six years from the date it was filed, whichever comes first.

    What Happens If You Miss Payments on a Consumer Proposal?

    Consumer proposals allow you to make monthly payments. If you were to miss three payments, or your payment is three months past due, the proposal will be annulled. When annulled, the agreement made on paying your debts will cease, allowing your lenders to once again be able to collect the money you owe them.

    What Happens When the Consumer Proposal Is Satisfied?

    When the conditions involved in your consumer proposal are satisfied, you will be released from the debts included in the proposal. You won’t be required to pay anything further on your debts. You will then receive a certificate of full performance.

    Seeking debt relief can be a difficult task, especially if those debts are weighing you down. No matter how hard of a struggle it can be, we assure you that there are debt solutions available to assist you. Make an appointment for a free consultation today, and we can see if a consumer proposal is the right option for you.