Consumer Proposal vs Bankruptcy


Are you facing financial difficulties and you know you have to do something about it because you are stressed and worried about what might happen? Perhaps you’ve researched it a bit online or heard some ads on the radio, but what is the best option that suits your unique situation? How do you choose between Consumer Proposal vs Bankruptcy? The answer: learn more about both and see which better fits your situation. Below we discuss two of the more popular options for eliminating your debt in Alberta, which are Personal Bankruptcy and Consumer Proposal.

Each of these tools to deal with unmanageable debt are legislated by the Canadian Government and must be administered by a Licensed Insolvency Trustee “LIT”. AB Consumer Proposals can be a great option while AB bankruptcy might be the better option, depending on the unique circumstances of your finances.

Our approach is to typically look at Bankruptcy as a last resort

Though it is sometimes the best option for an individual’s situation. Deciding between a consumer proposal vs bankruptcy is easy once you understand which is better in which situation. Here are some reasons why we look first at whether a consumer proposal is possible before considering a bankruptcy filing:

In a consumer proposal, you may offer to your creditors an amount that you can afford to settle on all of your debts. You can make payments all at once or spread out the payments for a period of up to 5 years. A Consumer Proposal lets you remain in control of the process.

What are some situations where a bankruptcy is the best option?

Some people have been dealing with debt a very long time and some have had a life event that leads to the accumulation of debt very quickly. A bankruptcy is a tool that can eliminate these debts and here are some factors to consider that we have seen are common with bankruptcy filings instead of filing a AB Consumer Proposal.

  • No Steady Income

    If there is no income coming in on a regular basis, it will be hard to make a proposal that you can stick with because committing to monthly payments is not reliable.

  • Bankruptcy is Cheaper

    In a proposal, you must offer your creditors something better than what they would receive in a bankruptcy. This is typically, though not always, a monetary consideration. So, bankruptcy typically costs less.

  • Bankruptcy is Quicker

    In Alberta, a first time bankruptcy can be over in as short as 9 months. If you have income over a government set guideline amount, this may increase to 21 months.

  • Unfiled Tax Returns and Large Canada Revenue Debts

    These can be eliminated in a bankruptcy.

  • Wage Garnishments

    If a creditor has notified your employer to garnish your wages, a bankruptcy can be filed quickly to stop this garnishment.

Both AB Consumer Proposals and Personal bankruptcy can be used to get out of debt and provide an individual with a break from creditor calls and the burden of debt.

If you are facing difficulties paying off your bills we are here to discuss these, and other options with you.
The first step to financial wellness is contacting a professional who will listen to your situation and help you determine the best course of action. At The Fryzuk Group we bring years of experience with helping people get out of debt and offer you free consultations to help you with your challenges.

When faced with a bankruptcy or a consumer proposal, there is a lot to consider.

Please reach out and let us know that you are interested in becoming debt free. You can do this by calling us at 403-561-8228, texting us at 587-438-9786 or emailing

Let's get started, contact The Fryzuk Group, Licensed Insolvency Trustees, now.