Can You Switch Between Bankruptcy and Consumer Proposal in Canada?

Switching Between Bankruptcy and Consumer Proposal in Canada

In Canda, you have two insolvency options:



Both options will help you become debt-free, yet they’re equally suitable depending on the situation.

Therefore, deciding between a consumer proposal or bankruptcy is a big decision.

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This leads us to a popular question: can you switch between the two?

What if you filed for bankruptcy, but your finances improve, and you’d rather opt for a consumer proposal?

Today, we explore your options if you’re looking to switch between the two.

Can you switch from bankruptcy to a consumer proposal?

It is possible to do this, but you don’t have to.

The most common reason for this is that your situation changes and you have more money than expected.

Perhaps you got promoted at work or inherited some money.

Either way, you can file a consumer proposal to get out of the bankruptcy agreement and enjoy more favourable terms.

You can hold onto your assets with a consumer proposal, and it stays on your credit report for less time.

Alternatively, you can carry on with the bankruptcy and just make larger payments.

This can help you get out of it a lot quicker, so it’s entirely up to you.

Can you switch from a consumer proposal to bankruptcy?

Again, you can do this if your situation changes.

Here, the situation will get worse, meaning you struggle to abide by the proposal terms.

If you fail to keep up with your payments, your consumer proposal can be annulled.

This will then mean you owe all your debts once more, and your creditors will come snapping.

So, bankruptcy seems like the best option to avoid the added stress and be absolved of your debts.

However, it’s worth noting that you can defer up to two payments during a consumer proposal.

So, if money is tight, you can defer for a couple of months to try and re-budget or find some extra funds.

This is definitely something you should try to do before switching to bankruptcy.

Furthermore, it’s possible to alter the terms of your proposal.

This is a high-risk strategy as your creditors will have to vote for or against the new terms.

If they vote in favour, you should be able to keep up with your payments under the new terms and avoid bankruptcy.

But, if they vote against it, the proposal is completely annulled.

To summarize, you can switch between bankruptcy and consumer proposals – and vice versa.

Nevertheless, it’s still worth considering all your options before making this decision, particularly if you want to go from a consumer proposal to bankruptcy.

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If you’re in debt and worried about what to do, give us a call today.

We can organize a consultation to go through all the best debt relief options and keep your creditors at bay.

Pick up the phone or leave your details in our online evaluation form to book your appointment today.

We look forward to hearing from you and helping you become debt-free!

Information on Consumer Proposals

Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
Consumer Proposal Eligibility
How to Amend a Consumer Proposal

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