Should I File a Second Bankruptcy or a Consumer Proposal?

Filing a Second Bankruptcy or Consumer Proposal: Is it a Good Idea?

The decision as to whether a second bankruptcy or consumer proposal is better depends entirely on the individual financial circumstances.

It is actually fairly common to consider the possibility of filing for a second bankruptcy.

Nonetheless, there are ramifications of filing multiple bankruptcies.

To achieve the best results for your financial future, you must consider all aspects of the matter.

Understand the Costs

You must realize that second bankruptcies are pricier than the first filing.

Due to the fact that they remain on your record for longer and take more time to discharge, a second bankruptcy always costs more.

When you file without a surplus, you are automatically discharged after a two-year period.

This is true so long as the bankruptcy is not contested.

If you do have surplus income, then you will spend at least thirty-six months in a state of bankruptcy prior to automatic discharge.

Of course, this is provided there is no contest to the bankruptcy.

If there is a creditor who contests your bankruptcy proceedings, there is recourse, though this is handled directly through your trustee.

In the event of a third bankruptcy filing, you cannot receive a discharge prior to an application from your trustee.

This means that the ultimate decision to achieve a discharge lies with your trustee.

If they refuse to file, you must apply directly to your jurisdiction’s court of bankruptcy.

There, you can apply for a discharge hearing.

A common issue relates to surplus income.

This means you require larger payments, over longer periods of time.

It adds a lot to the price of bankruptcy.

Especially considering the fact that it stays on your credit file for at least fourteen years after filing, it may be more ideal to pursue a consumer proposal instead.

About Consumer Proposals

A viable alternative to bankruptcy, consumer proposals have a wide array of benefits that make them a preferable direction.

First, it leaves your credit file sooner, remaining around for only three years after completion.

It also gives you the opportunity to pay off the amount sooner if you choose.

This enables you to get a clean credit profile more quickly.

Though it costs as much as a bankruptcy filing, you can divvy up the payments according to a better timeline.

Instead of rushing to discharge a bankruptcy, you can extend the process to as much as five years to help keep liquid funds available.

They also enable you to make additional payments to pay off the amount owing should your situation improve, such as a promotion or raise.

Final Notes

Ultimately, consumer proposals pose less of a threat to your credit, especially if the alternative is a second bankruptcy.

If you want to learn more about your options, contact a Licensed Insolvency Trustee.

They can offer you objective, actionable advice on your finances.

As skilled financial advisors, they will assist you in restoring your finances without excessively damaging your credit report.

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