Consumer Proposal or Bankruptcy – Are You The Right Candidate?

A number of Canadians are finding themselves under insurmountable debts. Whether it is because of some medical needs, student loans, mortgage loans, credit card loans or any other loans – when these debts get overwhelming and people start spending more than they can pay back, they are left with two options. These alternatives are consumer proposal and bankruptcy. Both of the options can help you get out of the debt; however, both have different ways to go about doing that. Below, we will discuss which option out of these two is the best for which type of candidate.

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Candidate for Consumer Proposal

Consumer proposals are best for those individuals who want to keep their assets protected, and have a stable flow of income. The reason is that the creditors in this debt management are more interested in how much the individual earns, as that is the asset for them. They do not want your liquidated assets. Being insolvent and having a stable wage makes you an ideal applicant for consumer proposal. In addition, you will also be entitled to pay all the taxes.

Once you settle for consumer proposal, you have power over your finances and assets. The decision regarding what to do with the vehicle or home is entirely yours rather than of any bank or trustee. Additionally, the reports regarding bankruptcy will be sent for only 3 years.

Moreover, there are certain limitations of consumer proposal itself that are necessary conditions to be eligible for it. Not having the debt of more than $250,000 other than mortgage, and inability to payback the entire debt are some of the conditions, and even meeting the conditions do not necessarily provide you with the creditor’s acceptance. You will receive a certificate whenever your proposal is approved.

Candidate for Bankruptcy

On the other hand, people who are right candidates to file for the bankruptcy are those who want to free their unsecured debts. To be qualified to file for personal bankruptcy in Canada, an individual has to be under the debt of more than $1,000. This will provide the individual with financial relief and guard them from their creditors.

To settle the debt, the individual needs to be aware that they have to give up few of their assets. Moreover, the bankruptcy will remain for 6 years on your credit rating if it is your first time declaring bankruptcy. Those who get automatic discharge will find bankruptcy on their credit rating for less than seven years. Lastly, you are not obligated to pay the taxes, as you cannot afford to pay.


You can take help of counselors who can guide and advise you on your debt problems, and ways to deal with it. A professional insight will surely be supportive to help you move forward and take responsibility of your actions, and give you a financially fresh start.

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