Advantages of Filing a Consumer Proposal vs. a Bankruptcy

Consumer Proposal or Bankruptcy

Consumer Proposal or Bankruptcy

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 the 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:

  • Ability to spread equity/surplus income payments over a longer period – i.e. lower monthly payments

  • Payments fixed once accepted – no impact if income increases in the future or an inheritance, windfall, or lottery winnings, etc. are received

  • Can be paid off early

  • Allows you to reduce many types of debt
  • Potentially shorter impact on Credit Report

    • Falls off your credit report 6 years from filing, or 3 years from the date you pay it off, whichever comes first.

    • Good for someone who has been bankrupt previously (2nd bankruptcy reports for 14 years on credit report).

    • Keep income tax refunds and GST payments

    • Avoids the negative stigma attached to the “B” word

Powell Associates Ltd. is a Licensed Insolvency Trustee. We are experienced, hands-on insolvency practitioners who understand the personal impacts of significant financial stress;

  • You won’t be stuck in an assembly line process.

  • You will expect and receive prompt responses and resolution of issues from our supportive and experienced team.

  • We will review your debt solution options, including filing a Consumer Proposal or Personal Bankruptcy.

  • We help Canadians with overwhelming debt get fresh financial starts.

Once you file a consumer proposal or personal bankruptcy, we deal directly with your creditors on your behalf. Your unsecured creditors are required to stop contacting you or continuing legal proceedings against you. Contact us for a free consultation.

We offer free consultations to review your financial situation and practical debt resolution options.  Contact us to discuss your situation over the phone, a video chat, or in person in Saint JohnMonctonFrederictonCharlottetownDartmouth, or Miramichi.