Evaluating the state of personal indebtedness in Newfoundland and Labrador, as well as the rest of Canada, is not as easy as it might seem. On the one hand, delinquency rates on consumer debt continue to be quite low. Well under 2%, according to an Equifax survey, of revolving lines of credit, installment loans and car loans are in delinquent status. That is a positive sign because it indicates that consumers continue to be able to pay the minimum payments on their debt each month.
The news is not entirely good, however. Canadian consumers may be having little trouble making payments on their debt, but their consumer debt levels continue to rise. Although delinquencies are low, these figures have had an impact on the number of people seeking assistance with their debt. Statistics Canada numbers show that the average debt load of Newfoundlanders that opted for a consumer proposal in 2021 is over $144,000. With that kind of debt load, it’s no wonder they searched for help.
If you are a resident of Newfoundland who is having trouble making your debt payments, it’s important to understand all of the debt relief options available to you, including the consumer proposal. Newfoundland residents who take advantage of solutions such as the consumer proposal or debt settlement can make real headway toward paying off their debt and save money at the same time.
How Does a Newfoundland Consumer Proposal Work?
With the help of a licensed bankruptcy trustee, you put together a legal proposal to your creditors that reduce your debt levels and interest charges if they accept it. Once a proposal is accepted, you make payments to your creditors via your bankruptcy trustee in one lump sum or an affordable monthly payment plan.
A consumer proposal in Newfoundland is designed for those who do not want to file for bankruptcy but have a high level of consumer debt. You will qualify for a consumer proposal in Newfoundland and Labrador only if your debt is less than $250,000. The maximum indebtedness for married couples is $500,000.
Should I Put Together a Newfoundland Consumer Proposal?
The answer to this question depends on your specific financial situation and whether the advantages for you outweigh the disadvantages of the consumer proposal. Keep these advantages and disadvantages in mind when you are considering whether or not to apply for a consumer proposal:
Advantages
• A consumer proposal protects your assets and keeps bill collectors from calling you.
• If creditors holding 51 percent of your consumer debt agree to the proposal, the other 49 percent must agree as well. This can force creditors who are not willing to deal with you to offer you favorable debt terms.
• The interest on your debt is frozen the day you file a proposal.
Disadvantages
• If you cannot get creditors holding 51 percent of your consumer debt to agree to the proposal, you may lose out on the favorable terms offered by those who do accept it.
• A consumer proposal looks just like a bankruptcy on your credit report, hindering your ability to get credit for about seven years.
• A consumer proposal does not always get you the most favorable terms from each creditor. A licensed bankruptcy trustee is required to pay your creditors as much as possible.
Insolvency & Consumer Proposal Statistics in Newfoundland and Labrador
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Annual Consumer Proposal Rates in Newfoundland and Labrador
(Per 1,000 Population Aged 18 Years and Older)
| Newfoundland and Labrador | ||||||||
|---|---|---|---|---|---|---|---|---|
| ’15 | ’16 | ’17 | ’18 | ’19 | ’20 | ’21 | ’22 | |
| Insolvency | 4.3 | 5.6 | 5.8 | 6.5 | 7.6 | 4.4 | 3.9 | 4.5 |
| Proposal | 0.8 | 2.0 | 2.6 | 3.3 | 4.1 | 2.6 | 2.5 | 2.9 |
| Avalon Peninsula | ||||||||
| Insolvency | 3.9 | 5.6 | 6.1 | 7.1 | 7.7 | 4.4 | 3.8 | 4.1 |
| Proposal | 0.8 | 2.4 | 2.8 | 3.8 | 4.3 | 2.6 | 2.4 | 2.8 |
| South Coast – Burin Peninsula and Notre Dame – Central Bonavista Bay* | ||||||||
| Insolvency | 5.0 | 6.3 | 6.2 | 6.9 | 8.9 | 4.8 | 4.3 | 5.1 |
| Proposal | 0.5 | 1.5 | 2.7 | 3.0 | 4.5 | 2.8 | 2.7 | 3.2 |
| West Coast – Northern Peninsula – Labrador | ||||||||
| Insolvency | 4.1 | 4.6 | 4.3 | 4.6 | 5.3 | 3.8 | 3.5 | 3.7 |
| Proposal | 0.8 | 1.5 | 1.9 | 2.4 | 3.0 | 2.3 | 2.4 | 2.3 |
Source: https://www.ic.gc.ca/
*In 2014, Statistics Canada’s Labour Force Survey combined the following economic regions (ERs): South Coast – Burin Peninsula and Notre Dame – Central Bonavista Bay.