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