Consumer proposal filings spike as debt-ridden Albertans seek relief

There has been a sharp increase in the number of Albertans filing consumer proposals as a way to get out from under heavy debt loads, new figures reveal.

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A consumer proposal is a legally binding process under the Bankruptcy and Insolvency Act administered by a bankruptcy trustee where a debtor offers to pay a creditor a percentage of the amount owed,extend the deadline for paying it off, or both.

According to a report released Friday by the Office of the Superintendent of Bankruptcy Canada, the number of consumer proposals filed by Albertans spiked by just under 58 per cent from December 2013to December 2014.

At the same time, the number of consumer bankruptcies filed in Alberta dropped by almost 18 per cent from 2013 to 2014.

In the last four years, in Alberta we have seen the popularity ofbankruptciesdecrease, which can be partially attributed to Albertas booming economy and greater consumer education around the benefits of consumer proposals, said Bruce Alger, a licensed trustee at the accounting firm Grant Thornton.

As oil prices remain low and sources are forecasting more potential job cuts for Alberta, we anticipate consumer proposal filings to increase further in 2015 for those who are able to maintain some income.

Alberto Rosati, an estate administrator who deals with insolvency filings, says Albertans should get their debt in check sooner rather than later.

I do find that a lot of Albertans tend to live somewhat beyond their means especially in our environment where interest rates have been so low people have taken advantage of that and have accumulated more debt, he said.