Bankruptcy vs. Consumer Proposals

Bankruptcy vs. Consumer Proposals

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Your circumstances will dictate which is better for you; Bankruptcy vs. Consumer Proposals.

Bankruptcy vs. Consumer Proposals?

A debtor without many assets to protect might want to think about filing bankruptcy, as this will likely be the better choice for you.

Debtors living in a province with a high exemption limit should also consider bankruptcy.

Bankruptcy can be over in as few as nine months, which means you can get out of debt quicker than with a proposal in almost all cases and will be able to begin rebuilding your credit sooner.

A consumer proposal costs more than a bankruptcy but is ideal for a person wanting to retain assets that might be lost in a bankruptcy.  Other reasons for preferring a consumer proposal are 1) for moral reason does not want to file bankruptcy, 2) or is a director of the company, which he would have to give up in a bankruptcy.

This is a quick comparison of the two most popular debt relief options.

Key Considerations. Consumer Proposals Bankruptcy
Why File? Satisfaction of not going bankrupt. Keep all assets. Affordable monthly payments. Quick result. Can sometimes rebuild credit more quickly.
How much debt? Up to $250,000, excluding mortgages. Unlimited.
Assets retained. Most, if not all assets are retained, such as a home or vehicles. Can retain the exemptions set by the provinces or territories.
Cost. Must offer more than bankruptcy. Depends on income and family situation.
When completed. Usually set for 5 years but can be paid off sooner. 9 to 21 months for a first time bankrupt.
Are all debts erased? Yes. Yes.
Are the payments affordable? Yes. They could be higher than a Consumer Proposal.
Can be a director of a company? Yes. No.
Are monthly reports required? No. Yes.
Which gives the better credit rating?  Credit rating is an R7. Which is not good but slightly better than a bankruptcy. Credit rating is an R9, which is not good.

This website has been a godsend, I feel better informed and not so alone in this – thank you so much for this service and your quick response. Tonight I may sleep.

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