[et_pb_section fb_built=”1″ admin_label=”Banner Image with Heading and Text” module_class=”vertical-align” _builder_version=”4.16″ background_color=”#e7dff3″ use_background_color_gradient=”on” background_color_gradient_type=”circular” background_color_gradient_stops=”rgba(91,37,175,0.44) 15%|rgba(91,37,175,0) 70%” background_color_gradient_overlays_image=”on” background_color_gradient_start=”rgba(91,37,175,0.44)” background_color_gradient_start_position=”15%” background_color_gradient_end=”rgba(91,37,175,0)” background_color_gradient_end_position=”70%” background_image=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/08\/consumer-proposal-sample-letter_hero.jpg” min_height=”550px” bottom_divider_style=”wave2″ bottom_divider_color=”#e7dff3″ bottom_divider_height_tablet=”70px” bottom_divider_height_phone=”50px” bottom_divider_height_last_edited=”on|phone” background_last_edited=”on|phone” background_size_phone=”cover” background_position_tablet=”top_right” background_position_phone=”center_right” da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row custom_padding_last_edited=”on|phone” admin_label=”Row” _builder_version=”4.16″ background_enable_image=”off” max_width=”100%” custom_margin=”||||false|false” custom_padding=”||90px||false|false” custom_padding_tablet=”” custom_padding_phone=”||80px||false|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ global_colors_info=”{}”][et_pb_text admin_label=”Heading” _builder_version=”4.16″ text_font=”|600|||||||” text_font_size=”42px” text_line_height=”1em” text_orientation=”center” background_layout=”dark” module_alignment=”center” custom_margin=”||26px|||” custom_padding=”0px|||||” animation_direction=”top” text_text_shadow_style=”preset2″ global_colors_info=”{}”]<\/p>\n
Insolvency Options Compared<\/p>\n
[\/et_pb_text][et_pb_text admin_label=”Text” _builder_version=”4.16″ text_font_size=”22px” text_line_height=”1em” text_orientation=”center” background_layout=”dark” module_alignment=”center” custom_margin=”||||false|false” custom_padding=”||||false|false” animation_direction=”bottom” text_text_shadow_style=”preset2″ global_colors_info=”{}”]Find out how a consumer proposal compares to good old fashioned bankruptcy.[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ custom_padding_last_edited=”on|phone” admin_label=”Intro Paragraph” _builder_version=”4.16″ background_color=”rgba(91,37,175,0.15)” custom_padding=”0px||0px|||” custom_padding_tablet=”||0px||false|false” custom_padding_phone=”||4px||false|false” top_divider_style_last_edited=”off|desktop” bottom_divider_color=”#ffffff” bottom_divider_repeat=”1x” bottom_divider_flip=”horizontal|vertical” bottom_divider_style_tablet=”” bottom_divider_style_phone=”” bottom_divider_style_last_edited=”on|phone” bottom_divider_height_tablet=”70px” bottom_divider_height_phone=”100px” bottom_divider_height_last_edited=”on|phone” bottom_divider_flip_tablet=”” bottom_divider_flip_phone=”horizontal” bottom_divider_flip_last_edited=”on|phone” da_disable_devices=”off|off|off” collapsed=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ width_tablet=”80%” width_phone=”80%” width_last_edited=”on|desktop” custom_padding=”0px|||||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ global_colors_info=”{}”][et_pb_dmb_breadcrumbs font_icon=”%%20%%” use_home_icon=”off” use_home_text=”on” show_custom_taxonomy_crumbs=”off” _builder_version=”4.21.0″ body_text_color=”rgba(102,102,102,0.8)” link_text_color=”rgba(42,209,61,0.8)” custom_padding_tablet=”” custom_padding_phone=”20px||||false|false” custom_padding_last_edited=”on|phone” animation_direction=”left” global_module=”6437″ saved_tabs=”all” global_colors_info=”{}” link_text_color__hover_enabled=”on|hover” link_text_color__hover=”rgba(90,39,178,0.4)”][\/et_pb_dmb_breadcrumbs][et_pb_text admin_label=”H1 Heading” _builder_version=”4.27.2″ custom_margin=”||0px|||” custom_padding=”||2px|||” animation_direction=”bottom” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n
Consumer proposal<\/a> vs bankruptcy<\/strong> – what\u2019s the difference between the two? A lot of Canadians are wondering \u2013 and for good reason. A lot of people are advertising consumer proposals. Sales people are pushing them. Are they as good as they sound? Is there something they\u2019re not telling us? How does a proposal compare to good old fashioned bankruptcy? The answer is that it all depends on your financial situation. When used appropriately, both bankruptcy and a consumer proposal can be an effective form of debt relief. However, both can also have significant impacts on your life both in the short-term and long-term. We discuss below the major differences between the two, the costs of both options, their effects on your assets, the time each process takes, their impact on your credit, the long-term consequences, and how to figure out which option is best for you.<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ next_background_color=”#e4f8e0″ _builder_version=”4.16″ _module_preset=”default” custom_padding=”130px||105px|||” top_divider_style=”ramp2″ top_divider_color=”#e7dff3″ bottom_divider_style=”curve2″ da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” custom_padding=”||14px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n There are many important aspects of this discussion to consider.<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row column_structure=”1_2,1_2″ _builder_version=”4.16″ _module_preset=”default” custom_padding=”0px|||||” global_colors_info=”{}”][et_pb_column type=”1_2″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n [\/et_pb_text][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ custom_padding_last_edited=”on|tablet” _builder_version=”4.16″ _module_preset=”default” background_color=”#e4f8e0″ custom_margin=”||0px||false|false” custom_margin_tablet=”||-90px||false|false” custom_margin_phone=”||-70px||false|false” custom_margin_last_edited=”on|phone” custom_padding=”50px||0px|||” custom_padding_tablet=”35px||118px||false|false” custom_padding_phone=”55px||||false|false” da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”1_2,1_2″ make_equal=”on” _builder_version=”4.16″ width_tablet=”80%” width_phone=”80%” width_last_edited=”on|phone” custom_margin=”|auto|1px|auto||” custom_padding=”40px||0px|||” global_colors_info=”{}”][et_pb_column type=”1_2″ _builder_version=”4.16″ animation_style=”slide” animation_direction=”left” animation_intensity_slide=”2%” custom_css_main_element=”margin: auto;\t” global_colors_info=”{}”][et_pb_image src=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/09\/agreement-to-repay_2colm.jpg” alt=”Agreement To Repay” title_text=”an-agreement-to-repay” align_tablet=”center” align_phone=”” align_last_edited=”on|phone” _builder_version=”4.22.0″ custom_margin=”0px||||false|false” custom_padding=”0px||||false|false” custom_padding_tablet=”||40px||false|false” custom_padding_phone=”||30px||false|false” custom_padding_last_edited=”on|phone” border_radii=”off|200px|20px|200px|20px” box_shadow_style=”preset2″ global_colors_info=”{}”][\/et_pb_image][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”4.16″ global_colors_info=”{}”][et_pb_text module_id=”major-differences” _builder_version=”4.16″ animation_direction=”top” global_colors_info=”{}”]<\/p>\n Both bankruptcy and consumer proposals are governed by the Bankruptcy and Insolvency Act<\/em><\/a>, directives issued to bankruptcy trustees by the Superintendent of Bankruptcy<\/a>, and provincial laws. They’re intended to provide protection from the courts for people who are insolvent and unable to repay their debts in full.<\/p>\n [\/et_pb_text][et_pb_text module_id=”major-differences” _builder_version=”4.16″ animation_direction=”top” global_colors_info=”{}”]<\/p>\n Bankruptcy was originally designed to provide honest people who had fallen upon unfortunate circumstances a fresh start when they had so much debt they didn\u2019t have any hope of repaying it.\u00a0<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text module_id=”major-differences” _builder_version=”4.16″ animation_direction=”top” global_colors_info=”{}”]<\/p>\n How bankruptcy works is that if someone files for bankruptcy, all collection activity on the debts included in the bankruptcy is stopped and creditors are typically forced to accept less for the debts owed to them than the borrower originally agreed to repay.<\/p>\n A consumer proposal is different from bankruptcy in that your bankruptcy trustee must offer your creditors an amount of money to settle your debts and your creditors vote on the offer. If the creditors who own the majority of your debt accept it, you repay the agreed on amount over a set length of time (usually just under 5 years).<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ prev_background_color=”#e4f8e0″ next_background_color=”#ffffff” _builder_version=”4.16″ _module_preset=”default” background_color=”#ffcc00″ custom_padding=”140px||120px|||” top_divider_style=”ramp2″ bottom_divider_style=”curve2″ da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text module_id=”the-ripoff” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n Consumer proposals have become the latest method for a growing number of for-profit companies and their sales people to take advantage of vulnerable, unsuspecting consumers. Don’t let this happen to you! Many debt relief companies are now claiming to offer consumer proposals as an easy way to get out of debt. There’s a problem. Only a licensed bankruptcy trustee is allowed to file paperwork for a consumer proposal.<\/strong> The debt relief companies charge thousands in fees only to refer you to a bankruptcy trustee who then charges his or her own fees.<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.16″ _module_preset=”default” custom_padding=”80px|||||” da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” custom_padding=”||27px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n Follow the three tips below plus start by speaking with a member of Credit Counselling Canada<\/a>, an association of non-profit credit counselling agencies who do not work on commission. If a consumer proposal is truly one of your best options, one of their agencies can let you know and refer you to a reputable bankruptcy trustee for free.<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row column_structure=”1_3,1_3,1_3″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”1_3″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_blurb title=”Talk to a Non-Profit Credit Counsellor” url=”https:\/\/nomoredebts.org\/debt-help\/consumer-proposal-canada” url_new_window=”on” image=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/06\/faq_icon_purple.png” alt=”FAQ Icon Purple” _builder_version=”4.16″ _module_preset=”default” header_level=”h3″ header_text_align=”center” header_text_color=”#5b25af” header_font_size=”20px” link_option_url=”https:\/\/nomoredebts.org\/debt-help\/consumer-proposal-canada” link_option_url_new_window=”on” global_colors_info=”{}” image__hover_enabled=”on|hover” image__hover=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/06\/faq_icon_green.png” header_text_color__hover_enabled=”on|hover” header_text_color__hover=”#2ad13d”]<\/p>\n Speak with a non-profit credit counsellor about your financial situation first. They will be able to review your situation with you and help you explore and understand all your options to deal with your debt.<\/p>\n [\/et_pb_blurb][\/et_pb_column][et_pb_column type=”1_3″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_blurb title=”Only Pay a Trustee for Consumer Proposal Services” url=”https:\/\/nomoredebts.org\/debt-help\/consumer-proposal-canada” url_new_window=”on” image=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/06\/debt-settlement_icon_purple.png” alt=”Debt Settlement Icon Purple” _builder_version=”4.16″ _module_preset=”default” header_level=”h3″ header_text_color=”#5b25af” header_font_size=”20px” text_orientation=”center” link_option_url=”https:\/\/nomoredebts.org\/debt-help\/consumer-proposal-canada” link_option_url_new_window=”on” global_colors_info=”{}” image__hover_enabled=”on|hover” image__hover=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/06\/debt-settlement_icon_green.png” header_text_color__hover_enabled=”on|hover” header_text_color__hover=”#2ad13d”]<\/p>\n Never pay money to anyone for consumer proposal services except a licensed bankruptcy trustee. By law, only a licensed trustee is permitted to do the work and charge for consumer proposals.<\/p>\n [\/et_pb_blurb][\/et_pb_column][et_pb_column type=”1_3″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_blurb title=”Watch Out for Commission Based Debt Consultants” url=”https:\/\/nomoredebts.org\/debt-help\/consumer-proposal-canada” url_new_window=”on” image=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/06\/warning-signs_icon_purple.png” alt=”warning signs icon purple” _builder_version=”4.16″ _module_preset=”default” header_level=”h3″ header_text_align=”center” header_text_color=”#5b25af” header_font_size=”20px” link_option_url=”https:\/\/nomoredebts.org\/debt-help\/consumer-proposal-canada” link_option_url_new_window=”on” global_colors_info=”{}” image__hover_enabled=”on|hover” image__hover=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/06\/warning-sign_icon_green.png” header_text_color__hover_enabled=”on|desktop” header_text_color__hover=”#2ad13d”]<\/p>\n Ask how the person helping you is compensated. Many people who will seek to advise you on your debts work on commission. Make sure the “solution” they’re suggesting is in your best interest – not theirs.<\/p>\n [\/et_pb_blurb][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ prev_background_color=”#ffffff” _builder_version=”4.16″ _module_preset=”default” background_color=”#e7dff3″ custom_margin=”0px||||false|false” custom_margin_tablet=”100px||0px||false|false” custom_margin_phone=”” custom_margin_last_edited=”on|tablet” custom_padding=”150px||70px||false|false” top_divider_style=”curve2″ bottom_divider_color=”#e4f8e0″ da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text module_id=”the-costs” _builder_version=”4.16″ custom_padding=”1px|||||” global_colors_info=”{}”]<\/p>\n The cost of a consumer proposal versus bankruptcy depends on a lot of factors, but here’s a general overview of what they look like:<\/p>\n [\/et_pb_text][et_pb_accordion _builder_version=”4.16″ _module_preset=”default” toggle_font=”|700|||||||” global_colors_info=”{}”][et_pb_accordion_item open=”on” _builder_version=”4.16″ _module_preset=”default” custom_css_main_element=”display: none;” global_colors_info=”{}”][\/et_pb_accordion_item][et_pb_accordion_item title=”Bankruptcy Costs” open_toggle_text_color=”#5b25af” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” open=”off”]The Office of the Superintendent of Bankruptcy issues income guidelines to bankruptcy trustees. The guidelines govern how much income someone going through bankruptcy is allowed to keep each month based on their family size. If their household income is over the allowed amount, they are required to pay their determined \u201csurplus income\u201d to their creditors. For someone going through bankruptcy for the first time who does not have any surplus income, they would be \u201cdischarged\u201d (released by the courts) from their bankruptcy proceedings after 9 months (possibly without having to pay anything). Once they are discharged, they are legally released from all debts included in the bankruptcy (secured debts like car loans and mortgages aren\u2019t included in a bankruptcy). If someone has \u201csurplus income,\u201d they would likely be required to pay their surplus income to their creditors for 21 months before being discharged. In addition to this, anyone going through bankruptcy also has to give up any valuable assets such as their vehicle if it\u2019s over a certain value, their home if the equity they own is over a certain value, and any other valuable assets. Finally, filing for bankruptcy usually costs somewhere around $1,800.[\/et_pb_accordion_item][et_pb_accordion_item title=”Consumer Proposal Costs” open_toggle_text_color=”#5b25af” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” open=”off”]<\/p>\n When you break it down, consumer proposals have many layers of costs. To begin with, filing a proposal costs approximately $1,500. However, trustees then keep the first 20% of your monthly payments as their administration fee. So if you file a consumer proposal for $35,000, the trustee will collect an additional $7,000 from you in fees. If you enter into a proposal through a debt consultant or company who is not licensed to file consumer proposals (here\u2019s a list of all licensed companies<\/a>), they can charge you thousands of dollars before referring you to a trustee (that you could have found for free on Google). If you have assets, that may increase the cost of your proposal too, but we\u2019ll talk more about that below.<\/p>\n [\/et_pb_accordion_item][et_pb_accordion_item title=”Another Common Cost” open_toggle_text_color=”#5b25af” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” open=”off”]<\/p>\n After you emerge from bankruptcy or finish your consumer proposal program, your credit score will be very low. To fix their credit, a lot of people are turning to credit repair companies who charge thousands of dollars for credit repair services. So for many people, this is an added cost of bankruptcy that should be considered since so many are doing it (we don\u2019t recommend these kinds of service. We believe most people can do a good job of fixing their credit on their own for a small fraction of the cost<\/a>).<\/p>\n [\/et_pb_accordion_item][\/et_pb_accordion][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ prev_background_color=”#e7dff3″ _builder_version=”4.16″ custom_padding=”130px||45px|||” top_divider_style=”wave2″ da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” custom_padding=”||0px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text module_id=”impacts-on-your-assets” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n With a consumer proposal, you technically aren\u2019t required to give up any assets, but things aren\u2019t always that simple. For creditors to accept the offer your trustee is proposing to them, the trustee must offer them more money than they would receive if you filed for bankruptcy.\u00a0<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row column_structure=”1_2,1_2″ make_equal=”on” _builder_version=”4.16″ width_tablet=”80%” width_phone=”80%” width_last_edited=”on|phone” custom_padding=”11px|||||” global_colors_info=”{}”][et_pb_column type=”1_2″ _builder_version=”4.16″ animation_style=”slide” animation_direction=”left” animation_intensity_slide=”2%” custom_css_main_element=”margin: auto;\t” global_colors_info=”{}”][et_pb_image src=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/09\/talking-with-a-trustee_2colm.jpg” alt=”A couple speaks to a credit counsellor about insolvency options” title_text=”talking-with-a-trustee” align_tablet=”center” align_phone=”” align_last_edited=”on|phone” _builder_version=”4.16″ max_height_last_edited=”off|tablet” custom_margin=”||||false|false” custom_margin_tablet=”||25px||false|false” custom_margin_phone=”||0px||false|false” custom_margin_last_edited=”on|phone” custom_padding_tablet=”||||false|false” custom_padding_phone=”||17px||false|false” custom_padding_last_edited=”on|tablet” border_radii=”off|200px|20px|200px|20px” box_shadow_style=”preset2″ global_colors_info=”{}”][\/et_pb_image][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”4.16″ global_colors_info=”{}”][et_pb_text module_id=”impacts-on-your-assets” _builder_version=”4.16″ animation_direction=”top” global_colors_info=”{}”]If you have assets that would need to be sold if you went bankrupt, your creditors will want your trustee to include the value they would receive from those assets in your proposal. So in essence, you can end up buying back your assets through a consumer proposal. This can significantly increase the cost of a proposal on top of all the fees previously mentioned.<\/p>\n With bankruptcy, you may of course be required to give up certain assets. What you have to give up depends on the value of your assets and the guidelines of the province you live in. Generally speaking, you’re usually allowed to keep the stuff you own in your house, a vehicle as long as it isn\u2019t worth very much, and your home as long as you only own a small amount of equity in it. Tradespeople and farmers are also able to keep certain tools and equipment that they need to generate an income up to certain values. For more details and to find out what you would specifically have to give up, you should speak with a bankruptcy trustee.[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ prev_background_color=”#ffffff” _builder_version=”4.16″ _module_preset=”default” background_color=”#e4f8e0″ custom_padding=”195px||40px|||” top_divider_style=”wave2″ da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”1_2,1_2″ module_class=”custom_row” _builder_version=”4.16″ _module_preset=”default” custom_margin=”0px|auto||auto||” custom_padding=”0px||3px|||” global_colors_info=”{}”][et_pb_column type=”1_2″ module_class=”vertical-align second-on-mobile” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text module_id=”time-involved-with-each-one” _builder_version=”4.16″ _module_preset=”default” custom_margin=”||0px|||” global_colors_info=”{}”]<\/p>\n If it\u2019s your first time going bankrupt, bankruptcy is much faster than a consumer proposal \u2013 and a lot cheaper too – if you don\u2019t own your home (or don\u2019t own a lot of equity in your home), don\u2019t have a valuable car, don\u2019t own other valuable assets, or have a high income. However, the effects of bankruptcy on your credit report usually last slightly longer. As we previously saw, the first time someone goes bankrupt, the court usually requires them to remain in bankruptcy or make payments to their creditors for 9 to 21 months. A typical consumer proposal, on the other hand, usually results in someone making payments to their creditors through their trustee for close to 5 years (you can pay it off more quickly if you can afford to).<\/p>\n [\/et_pb_text][\/et_pb_column][et_pb_column type=”1_2″ module_class=”first-on-mobile” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_image src=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/09\/reading-online-about-different-options_2colm.jpg” alt=”A man reviews his debt relief options while sitting in front of a of a laptop.” title_text=”reading-online-about-different-options” _builder_version=”4.16″ _module_preset=”default” animation_style=”slide” animation_direction=”right” animation_intensity_slide=”2%” border_radii=”off|200px|20px|200px|20px” box_shadow_style=”preset2″ global_colors_info=”{}”][\/et_pb_image][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ prev_background_color=”#e4f8e0″ _builder_version=”4.16″ _module_preset=”default” custom_padding=”125px||32px|||” top_divider_style=”ramp2″ da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row module_id=”impact-on-your-assets” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.20.2″ animation_direction=”top” global_colors_info=”{}”]<\/p>\n One of the worst things you can possibly do for your credit is to file a consumer proposal or file for bankruptcy. Both have the same effect on your credit and typically remain on your credit reports for roughly the same length of time. A consumer proposal typically takes around 5 years to pay off and then the record lasts on your credit report for another year after that. So it\u2019s normal for a proposal to impact someone\u2019s credit for around 6 years \u2013 even with a credit repair program. Bankruptcy payments last for 9 to 21 months. After that, the record stays on your credit report for 6 to 7 years depending on your province. So a first-time bankruptcy can impact your credit for 7 to 9 years. Click here for specific details.<\/a><\/p>\n People who sell proposals will usually split hairs about the difference in how a proposal is reported on your credit reports versus a bankruptcy. Technically, debts included in a proposal will report as an R7 (really bad) on your credit reports and debts included in a bankruptcy will report as an R9 (the very worst). But this is only half the story. The other half is that your credit report also displays a special warning notifying creditors that you have become insolvent and have received court ordered protection.<\/p>\n In the eyes of the court system, the credit reporting system, and banks, consumer proposals and bankruptcies are very close to the same thing: they are seen as insolvency. The difference in the way the two are reported on your credit report is so small that a lot of lenders can\u2019t actually tell whether you actually filed a consumer proposal or bankruptcy. Banks and credit unions are not interested in splitting hairs to figure out the difference. To them, both mean the same thing: instead of repaying your debts as you initially agreed to, you sought court protection and only repaid a small portion of what you owed. You may have had some very good reasons for becoming insolvent, but even for the most compassionate banker will have a hard time helping you until the record of your insolvency falls off your credit report.<\/p>\n Obtaining credit after filing a consumer proposal or bankruptcy is a huge problem for a lot of people. There are things you can do to try and restore your credit score as quickly as possible without paying credit repair companies thousands of dollars, but until the record of your insolvency is removed from your credit reports, obtaining credit can often be challenging.<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ prev_background_color=”#ffffff” _builder_version=”4.16″ _module_preset=”default” background_color=”#e7dff3″ custom_padding=”135px||100px|||” top_divider_style=”curve2″ da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” custom_padding=”||0px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text module_id=”long-term-consequences” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n Both consumer proposals and bankruptcy come with long term consequence that should be carefully considered before entering into either option.<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row column_structure=”1_2,1_2″ make_equal=”on” _builder_version=”4.16″ width_tablet=”80%” width_phone=”80%” width_last_edited=”on|phone” custom_padding=”21px|||||” global_colors_info=”{}”][et_pb_column type=”1_2″ _builder_version=”4.16″ animation_style=”slide” animation_direction=”left” animation_intensity_slide=”2%” custom_css_main_element=”margin: auto;\t” global_colors_info=”{}”][et_pb_image src=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/09\/searching-online_2colm.jpg” alt=”A woman resarches the long term consequences of insolvency option on her laptop.” title_text=”searching-online” align_tablet=”center” align_phone=”” align_last_edited=”on|phone” _builder_version=”4.16″ max_height_last_edited=”off|tablet” custom_margin=”||||false|false” custom_margin_tablet=”||25px||false|false” custom_margin_phone=”||0px||false|false” custom_margin_last_edited=”on|phone” custom_padding_tablet=”||||false|false” custom_padding_phone=”||17px||false|false” custom_padding_last_edited=”on|tablet” border_radii=”off|200px|20px|200px|20px” box_shadow_style=”preset2″ global_colors_info=”{}”][\/et_pb_image][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”4.16″ global_colors_info=”{}”][et_pb_text _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n Since both options involve the courts, a permanent public record is created. One place you can access this record is through a searchable online database which anyone can search for a small fee.<\/p>\n It\u2019s also possible that having an insolvency on your record can affect future employment opportunities. Careers in finance, banking, security, law enforcement, and public service can be affected. For trades and occupations that require employees to be bonded, insolvency can be a reason why some insurance companies can refuse to issue a bond.<\/p>\n If you choose to go bankrupt, you should also know that future bankruptcies have more serious consequences than your first bankruptcy. For example, after your first bankruptcy, a record is kept on your credit report for up to 7 years. However, for subsequent bankruptcies, a record is kept for 14 years.<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ custom_padding_last_edited=”on|phone” admin_label=”2 Columns – Text and Image” _builder_version=”4.16″ background_color=”#ffffff” custom_padding=”120px||50px||false|false” custom_padding_tablet=”||45px||false|false” custom_padding_phone=”100px||20px||false|false” top_divider_style=”ramp2″ top_divider_color=”#e7dff3″ top_divider_flip=”horizontal|vertical” top_divider_arrangement=”above_content” bottom_divider_height_tablet=”60px” bottom_divider_height_phone=”50px” bottom_divider_height_last_edited=”on|phone” da_disable_devices=”off|off|off” collapsed=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”2_5,3_5″ make_equal=”on” module_class=”custom_row” _builder_version=”4.16″ width_tablet=”80%” width_phone=”80%” width_last_edited=”on|phone” global_colors_info=”{}”][et_pb_column type=”2_5″ module_class=”vertical-align second-on-mobile” _builder_version=”4.16″ global_colors_info=”{}”][et_pb_text admin_label=”H2 + Paragraph Text” _builder_version=”4.16″ header_2_font=”||||||||” header_2_text_align=”left” header_2_font_size=”32px” header_2_line_height=”1.3em” module_alignment=”center” animation_style=”slide” animation_direction=”top” animation_intensity_slide=”5%” global_colors_info=”{}”]<\/p>\n Sometimes people end up fixated on consumer proposals and bankruptcy as though they are the only options. Depending on your situation, you could have other viable options. To have a look at all debt relief options that can be alternatives to insolvency (bankruptcy and consumer proposals), have a look at this comparison chart by clicking on the button below.<\/p>\n [\/et_pb_text][et_pb_button button_url=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/09\/Common-Debt-Relief-Options-in-Canada-Table.pdf” url_new_window=”on” button_text=”Comparison Chart” button_alignment=”center” _builder_version=”4.27.2″ custom_button=”on” button_icon=”5||divi||400″ animation_style=”fade” animation_duration=”3000ms” animation_delay=”1000ms” global_colors_info=”{}”][\/et_pb_button][\/et_pb_column][et_pb_column type=”3_5″ module_class=”first-on-mobile” _builder_version=”4.16″ global_colors_info=”{}”][et_pb_image src=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/09\/alternative-options_2colm.jpg” alt=”A person reviews the Credit Counselling Society’s table of debt relief options.” title_text=”alternative-options” align=”center” _builder_version=”4.16″ module_alignment=”center” max_height=”350px” max_height_tablet=”” max_height_phone=”” max_height_last_edited=”on|desktop” animation_style=”slide” animation_direction=”right” animation_intensity_slide=”2%” border_radii=”off|200px|20px|200px|20px” border_radii_tablet=”” border_radii_phone=”off|150px|20px|150px|20px” border_radii_last_edited=”on|desktop” box_shadow_style=”preset1″ global_colors_info=”{}” transform_styles__hover_enabled=”off|hover” transform_scale__hover_enabled=”off|hover” transform_translate__hover_enabled=”off|hover” transform_rotate__hover_enabled=”off|hover” transform_skew__hover_enabled=”off|hover” transform_origin__hover_enabled=”off|hover”][\/et_pb_image][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ prev_background_color=”#ffffff” _builder_version=”4.16″ _module_preset=”default” background_color=”#e4f8e0″ custom_padding=”150px||1px|||” top_divider_style=”ramp2″ bottom_divider_style=”ramp2″ bottom_divider_color=”#e4f8e0″ da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.16″ custom_padding=”1px|||||” global_colors_info=”{}”]<\/p>\n As you can see, when you look at a consumer proposal versus bankruptcy, there are definitely differences between the two, but they also have a lot in common too. What\u2019s most important, though, is that you find the best way to get your finances back on track in a way that will help you achieve your long-term goals. Consumer proposals and bankruptcy aren\u2019t the only ways of obtaining debt relief and consolidating debt. There\u2019s also the Debt Management Program<\/a>: a private and confidential form of debt relief that takes about the same length of time as a consumer proposal, comes off your credit report faster, and has no negative long-term side effects. There are also other ways of resolving debt problems that don\u2019t involve an official program or paying anyone. If you honestly want to carefully and objectively look at all your options<\/a>, contact a local non-profit credit counselling organization and speak with one of their credit counsellors. They\u2019ll work with you to help you find what will work best for you \u2013 even if it is a consumer proposal or bankruptcy. Their help is usually free, non-judgmental and always confidential. You can contact any member of Credit Counselling Canada<\/a>* or give us a call. Our help is always free, and we have professionally accredited credit counsellors who would be happy to help you.<\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”]<\/p>\nWhat You’ll Find Here<\/h2>\n
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Major Differences Between Consumer Proposals & Bankruptcy<\/h2>\n
Beware of the Big Debt Rip-Off<\/h2>\n
How to Keep from Getting Ripped Off<\/h2>\n
The Costs of Bankruptcy Versus Consumer Proposals<\/h2>\n
Assets You May Have to Give Up or Pay For<\/h2>\n
How Much Time a Consumer Proposal Takes vs Bankruptcy<\/h2>\n
Impact of a Consumer Proposal & Bankruptcy on Your Credit
The Story You May Not Have Heard<\/span><\/h2>\nLong Term Consequences<\/h2>\n
Alternatives to Consumer Proposals and Bankruptcy<\/h2>\n
Bankruptcy vs Consumer Proposal – How to Figure Out Which Insolvency Option is Best for You<\/h2>\n