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.

Bankruptcy vs Consumer Proposal Infographic

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