Comparison of Bankruptcy vs Consumer Proposal.
These are the two most popular ways of getting debt relief for Canadians suffering from a financial crisis.
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|Key Considerations.||Consumer Proposals.||Bankruptcy|
|When will my debt be erased from the credit bureau?||3 years after the consumer proposal is completed.||Bankruptcy: 6 years after the
|Can I pay back less then I owe and have the rest of the debt erased?||Yes.||Yes.|
|Once I make a plan, will my creditors, including CRA, be forced to stop all actions against me including trying to collect money; phoning me; garnisheeing my wages or repossessing my assets?||Yes.||Yes.|
|Which will give me a better credit rating?||You can start to rebuild your credit rating as soon as your consumer proposal has been completed.||You can start to rebuild your credit rating as soon as you have been discharged.|
|Which is quicker?||Lasts up to 5 years.||Most 1st time bankrupts are discharged in nine months.|
|What are the qualifications?||Can include consumer debt up to $250,000, excluding mortgages.||No restrictions on the amount of debt.|
|What assets are retained?||Can include assets that might be lost in a bankruptcy.||Only assets set by the province or territory of residence.|
|What happens if income increases?||The proposal payments do not change.||There may be additional funds payable and the bankruptcy term may be extended.|
|What happens to windfalls?||Windfalls, such a lottery winnings and inheritances are retained.||If triggered prior to or during the bankruptcy, they go to the trustee, for the benefit of the creditors.|
|Which is cheaper?||A consumer proposal must offer more than the creditors would get in a bankruptcy.||A bankruptcy is cheaper, with most costing the minimum of $200./month for 9 months.|
|Is Government approved Credit Counselling offered?||Yes.||Yes.|
|What if I have a dispute?||You have the right to have your dispute mediated.||You have the right to have your dispute mediated.|