Advantages of Filing a Consumer Proposal vs. a Bankruptcy
In many circumstances, personal bankruptcy is the only viable option to deal with a financial situation that has gotten out of control.
However, in situations where the debtor has equity in assets (house, vehicle, investments) or has been previously bankrupt, there is another option. A Licensed Insolvency Trustee can help you put together a settlement proposal to your creditors whereby you pay a portion of what is owed and creditors agree to write off the remaining balance. This process is known as a consumer proposal and it provides you with the same legal protection from creditors as a bankruptcy.
The structure of the proposal can be creative and involve the sale, over time, of assets and payment of all or a portion of equity in those assets to your creditors. This would allow you to settle your debts through a lump-sum payment instead of having to make monthly payments.
Here are some of the main benefits of a consumer proposal:
- Spread equity/surplus income payments over a longer period – i.e. lower monthly payments
- Payments fixed once accepted – no impact when income increases in the future or inheritance, windfall, lottery winnings, etc.
- Can pay off early
- Potentially shorter impact on Credit Bureau
- Only 3 years after completion
- Good for someone who has been bankrupt previously (2nd bankruptcy reports for 14 years on credit report).
- Keep income tax and GST returns
- Avoids the negative stigma attached to the “B” word
Powell Associates Ltd. is a Licensed Insolvency Trustee (LIT) focused on providing debt settlement, proposal and bankruptcy solutions for individuals and businesses. We offer free consultations to review your personal financial situation and practical debt resolution options. Contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint John, Moncton, Fredericton, Charlottetown or Dartmouth - it's your choice.