Personal Debt Solutions Canada - Proposals VS Personal Bankruptcy
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Consumer Proposal vs. Personal Bankruptcy in Canada. What is the difference?
Do Creditors prefer a Consumer Proposal vs. Bankruptcy?
Most creditors are prepared to accept a consumer proposal as it allows them to recover more money than they would otherwise have been able to collect if the debtor declared bankruptcy. If your offer is too low in comparison to what they could receive in a bankruptcy, they may counter your proposal and ask for more money to be paid over a longer term. They always look to see what your payment requirements would be in a bankruptcy to determine if the proposal would be a better offer.
Who should consider a Consumer Proposal vs. a Bankruptcy?
You may consider a Consumer Proposal a viable solution if:
What is the difference between a Consumer Proposal and a Debt Pooling or Credit Counselling arrangement?
A consumer proposal is a contract negotiated between you and your creditors by a bankruptcy trustee. In Canada to develop a Proposal to which ALL of you creditors are bound MUST be done through a Trustee in Bankruptcy. Other types of arrangements with your creditors including informal repayment arrangements you have negotiated yourself or through debt poolers, or debt repayment plans put together by a credit counselor are NOT binding on all creditors in the same way that a Consumer Proposal is when it is overseen by a Trustee in Bankruptcy. As well, these other types of informal repayment options cannot deal with personal or corporate tax debts from the Canada Revenue Agency in the same way that a Proposal can when administered by a Trustee.
How do I know if a Consumer Proposal is right for me?
All your debt repayment alternatives must be considered before you can make an informed decision about whether a consumer proposal is the right solution for you. A proposal to creditors is designed to offer more to your creditors than they would get in a bankruptcy. But there may be personal reasons why a consumer proposal would be beneficial to a debtor such as those debtors who's employment or security clearances or professional designations could be affected if they file for personal bankruptcy.
Meeting with a Bankruptcy Trustee is the best way to understand all of your options, as they are the only ones in Canada who can oversee either a Consumer Proposal or a personal bankruptcy.
What happens when I file a Consumer Proposal vs. What happens when I file for Bankruptcy?