How Can A Consumer Proposal Or Bankruptcy Help Prevent You From Being Evicted?

Things have been difficult in recent years for those who rent their home in Winnipeg or the rest of Manitoba. From June 2022 to June 2023, the average rent for a one bedroom unit in Winnipeg has risen by 8.3%. The fact that this increase in peoples’ monthly rent costs is occurring simultaneously with a period of high inflation overall, is no coincidence.

From a landlord’s perspective

The price of construction materials, labour, supplies and other costs related to building and maintaining rental properties have increased. Many landlords are trying to pass these costs along to their renters in the form of regulated or unregulated rent increases.

Furthermore, most rental properties built are financed with debt. This means that rising interest rates are putting additional pressure on landlords to increase home rental prices. If not, they risk having the rent that they collect fall short of the amount needed in order to make the mortgage payments on the property.

From a renters perspective

This is happening at the same time as renters are facing pressures on their household budget beyond just their rent. The overall cost of living continues to climb, with the Manitoba Consumer Price Index showing inflation of 3.4% between May 2022 and May 2023.

The difficulties that renters are facing have led to calls for more rent control and renter’s laws that would improve renter’s rights. Despite these concerns, we are not aware of any planned charges to the Residential Tenancies Act, the Landlord and Tenant Act or other tenant law that would result in stated maximum rent increases in Manitoba to help your renter’s budgets.

This may be because both landlords and renters are being squeezed by the rising costs involved, so it would be difficult to find a fix that was fair to both. As such, it appears that the status quo will continue for the foreseeable future.

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Reassessing your budget

If you are struggling to make rent or sometimes having to make late payments, it’s time to take a closer look at your overall financial picture. There are not many expenses in life that are more essential than your rent payment, as failure to make it means eventual eviction and great upheaval for you and your family.

With that in mind, it may be necessary to search your budget for less important items that can be cut back on in order to insure that your rent payments are made.

Exploring your options

If you are carrying debt, one of your biggest monthly costs might be the payments that you are making on that debt. With that in mind, if you are having trouble finding enough room in your budget for your rent and other monthly living expenses as well as your debt payments, you should consider your options. It is probably worth investigating how you can reduce your debt payments in order to make sure that you have the ability to keep on top of your rent payments.

This can be done by asking your creditors to extend the repayment terms to make each monthly payment smaller or by requesting that they reduce the interest rate that you pay on your debt.

Another option may be to move your loan to another financial institution that offers you more favourable terms. While you may be successful, it is also possible that you will be unable to arrange better terms for your debt by negotiating directly with lenders, especially in the present environment of increasing interest rates.

Getting help you need

If you cannot get better terms on your own, it might be time to have a proactive conversation with a Licensed Insolvency Trustee (LIT) by contacting us at LCTaylor. If a Consumer Proposal or Bankruptcy is appropriate, the LIT can suggest an option that will make your payments more reflective of what you can afford rather than what you owe.

By making your debt payments more manageable before you get to the point of falling behind on your rent, you will hopefully be able to keep on top of your rent payments going forward so that there is no threat of eviction.

Filing a Consumer Proposal or Bankruptcy

If you’re reading this while currently behind on your rent payments and facing eviction or the threat of it, you might be wondering if a Bankruptcy or a Consumer Proposal will deal with those rent arrears and allow you to stay in your home.

The answer to this question seems to vary by province, so we will refer to the current policy (as of July 2023) of the Residential Tenancies Branch of Manitoba. Their policy document on this matter states that when a tenant has filed a Bankruptcy, the Residential Tenancies Branch may still grant an order of possession (a document a landlord can use to force a tenant to move out) for rent owed from before the Bankruptcy.

On the other hand, the same document states that if a Consumer Proposal has been accepted, or has been filed and the creditors’ decision regarding acceptance or rejection is still pending, the Branch cannot grant an order of possession for rent owed from before the date of the proposal. Of course, the tenant must pay future rent as it becomes due after the filing of a Consumer Proposal, or the landlord would be able to apply for an order of possession for the non-payment of the amounts due post-proposal.

Reaching out sooner rather than later

As you can see, it would be wise to seek the advice of a Licensed Insolvency Trustee if you are having difficulty making your rent payments, regardless of whether or not your situation has gotten to the point where you are facing eviction. That said, it is usually best to reach out to one of our debt solution professionals as soon as you believe that your debt may be becoming a problem.

That is particularly true in the situation of a renter. If you are able to solve your debt issues before they start to impact your rent payments then your relationship with your landlord won’t be harmed. They won’t know that making rent was ever an issue for you.

If you are a renter with debt that feels like it may become unmanageable, then be proactive and contact us or call us at 204–925–6400 today to find out what options exist that may provide relief.

Originally published at https://lctaylor.com on September 27, 2023.