Advantages of Filing a Consumer Proposal vs. a Bankruptcy

Advantages of Filing a Consumer Proposal vs. a Bankruptcy

Road Sign_Decision
Road Sign_Decision

In many circumstances 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 from higher income in 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

For a free consultation over the phone or in person in Saint John, Moncton, Fredericton or Charlottetown, please contact us. Powell Associates Ltd. is a licensed insolvency trustee focused on providing debt settlement, proposal and bankruptcy solutions for individuals and businesses.