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Consumer Proposal vs Bankruptcy

If you’re struggling with debt, it’s important to learn about the options available to you and your specific financial situation. Filing for Bankruptcy or offering a Consumer Proposal are just two of the solutions that the qualified debt advisors at Fuller Landau can help with, once we’re certain that all other options have been exhausted.

When you file for Bankruptcy, you essentially dispose of some personal assets to eliminate your outstanding debts. It is a serious legal process, lasting as little as 9 months. A Consumer Proposal is often a preferred alternative to Bankruptcy, in which you make an offer to your creditors to repay only a fraction of your debt, based on your financial ability.

The two processes share a couple things in common:

  • Immediacy: The debt protection provided by a Bankruptcy or Consumer Proposal is immediate. Your unsecured creditors are notified within 5 business days of your filing, and you are protected from any further collections at that time.
  • Counselling: Individuals filing a Consumer Proposal or Bankruptcy are required to attend two counselling sessions within 7 months, to receive guidance on budgeting and money management, and to develop a workable plan for a healthy financial future. Monthly income statements must also be submitted by people filing for Bankruptcy.

Differences Between Consumer Proposals and Bankruptcy

Understanding which debt relief option is best for you can be confusing and overwhelming. The following chart highlights the key differences between Consumer Proposals and Bankruptcy so you can gain clarity on these potential insolvency solutions and the implications of each. In general, you’ll notice that the eligibility requirements for a Consumer Proposal are more restrictive, while the penalties are less severe than for Bankruptcy.

Consumer Proposal Bankruptcy
Debt Limitations For debts less than $250,000 (excluding your home mortgage) No limit on the amount of debt
Eligibility Only available to individuals Available to Individuals and companies
Negotiability Creditors will have 45 days to vote for or against the proposal, or to submit a counter-offer. If approved by majority of creditors, the proposal receives court approval and becomes legally binding. Creditors cannot stop the process
Creditor Repayment Settlements offered must be more favourable to creditors than a Bankruptcy Pays out based upon income and value of liquidated assets
Monthly Payment A fixed amount that does not vary with income A portion of your monthly income must sometimes be paid to the Trustee for the benefit of your creditors; amount varies as income changes
Tax Refunds You keep any tax refund you receive Tax refunds relating to a Bankruptcy year or prior years will go to the Trustee for the benefit of your creditors
Payment Period Can last from 1-5 years First-time Bankruptcies can last from 9-21 months.
Early Release Can be paid down earlier than scheduled for early release, with no penalties and no interest Early payments can be made, but do not result in early discharge

Want to learn more about the difference between a Consumer Proposal vs Bankruptcy? Contact us today for a free consultation. We’ll help you identify which option is most viable, or if either are even necessary.

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Consumer Proposal vs Bankruptcy

Can You Relate?

When it comes to debt, particularly high-interest debt from credit cards, a few missed payments can often become a slippery slope towards out-of-control debt.

Minimum payments barely cover the interest. If those minimum payments are missed, or if you need to go further into debt to pay them, it’s time to get help.

Nobody likes dealing with constant harassing phone calls or late payment notices. if you can’t afford to pay off all your debts, they won’t stop until you take action.

Often, wage garnishments from a creditor just compound the problem, and make it even more difficult to pay off your other debts.

Get A Fresh Start


It’s time to take back control of your life.
Call us today at (416) 927-7200 or fill the in the form below and book your free consultation.