Consumer Proposal Debt Limit - Manitoba Bankruptcy
Consumer Proposal Debt Limit
A consumer proposal is a great option for individuals who can afford to pay back part of their debt.
Factors such as interest charges play a big part in the failure to meet the agreed instalment prices.
A consumer proposal is a legal document that offers creditors a partial repayment across a five-year period or less.
However, it is not as easy as offering the lender a sum of money in exchange for relief from debt.
There is a specific criteria which qualifies a debtor to make a consumer proposal.
There is also a limit for the total amount of debt.
To qualify for a proposal, the debtor must ensure that they do not exceed the consumer proposal debt limit.
This limit took effect in September 2009 and states that the total amount of debt owing, excluding mortgage on your current residence, must be less than $250,000 in order to qualify.
You can determine if you are eligible to consider a consumer proposal by making a list of your total balances owed to lenders.
To determine if you qualify for a proposal several factors are taken into consideration.
These factors may impact the final decision.
The Division 1 Proposal
In Manitoba, there is another type of proposal that debtors can make to their credit lenders.
This proposal is called a Division 1 Proposal and finding out whether you qualify consists of more than just understanding the consumer debt limit.
The process is similar to a consumer proposal, except it is only available to individuals with debts greater than $250,000, excluding the mortgage on their primary residence.
The Division 1 proposal is a formal procedure by the Bankruptcy and Insolvency Act, which sees the process carried out through a Licenced Insolvency Trustee.
What Happens If the Proposal Is Accepted?
Once your proposal is accepted you will make payments to the trustee.
He or she will then turn over the funds to your unsecured creditors.
In addition, the debtor must continue to make regular payments to the Trustee and adhere to any agreed conditions that were set out in the proposal.
How Can a Proposal Help Me?
Proposals are a great way for people to resolve their debt issues without having to file for personal bankruptcy.
A consumer proposal gives an individual a chance to repay a portion of their debt they can manage.
Contacting a Trustee will allow you to understand all of the alternative options to filing for bankruptcy.