What is the difference between a bankruptcy and a consumer proposal?

Before I answer your questions, let me first discuss the similarities between a bankruptcy and consumer proposal.

1. They both give you a fresh start from your debts;

2. They are both administered by a licenced trustee;

3. They both give you court protection from your creditors.

Now let me discuss the differences.

1. In a bankruptcy the more you earn, the more you pay. The payment in a consumer proposal is fixed;

2. In a bankruptcy you lose certain assets such as tax refunds, certain RRSP’s, RESP’s and equity in house and car. You control your assets in a consumer proposal;

3. You have monthly reporting to your trustee in a bankruptcy. You don’t in a consumer proposal.

Every situation is different. For most people who are low income and don’t have assets, a bankruptcy is a better option.

If your income is high, or you have a lot of assets, a bankruptcy would be expensive each month. For most people, they prefer to have a smaller monthly payment in a consumer proposal.

Give me a call at 519-250-8060 or 310-PLAN and we can review which option may be better for you.