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Instead of Bankruptcy try a Consumer Proposal

By Darrell Pauls

Instead of Bankruptcy try a Consumer Proposal

Are you thinking of possibly filing for bankruptcy? If so, have you looked into the negative drawbacks of bankruptcies? If you aren’t sure that a bankruptcy is the right option for you, there is another option out there for people who need help with their consumer debt. A Consumer Proposals is a tool that many Canadians have used to help them get out of debt and become debt free.

What is a Consumer Proposal?

A consumer proposal is a legal process in which a debtor can strike a deal with their creditors to pay back a portion of what they owe without interest or penalty. The debtor’s unsecured debts are then grouped together into one easy payment.

Why would a Consumer Proposal be better for me than a bankruptcy?

A Consumer Proposal is a viable alternative to Bankruptcy in Canada. It allows consumers protection from their creditors while allowing them to repay a portion of what they owe without the full impact of bankruptcy.

Here are some of the highlights of a Consumer Proposal:

  • In a Consumer Proposal you pay back only a percentage of what you owe without interest or penalty
  • The repayment period is up to 60 months
  • The repayment amount is based on your budget and ability to pay
  • Consumer Proposals do less damage on your credit report than a bankruptcy by reporting an R7 instead of an R9.
  • It is quicker and easier to begin rebuilding your credit using a Consumer Proposal vs a Bankruptcy.
  • You are allowed to keep your assets based on your Provincial legislation.

There are a lot of negative elements to claiming bankruptcy. Here are a few of the drawbacks to bankruptcy:

  • Knowing you have claimed bankruptcy is tough pill to swallow. It is embarrassing for many people to have to admit to their family and friends that they have claimed bankruptcy.
  • You are required to fill out monthly income and expense reports during your bankruptcy and if your income goes up, it may affect how much you will pay as well as how long the bankruptcy could last.
  • You may lose income tax returns during your bankruptcy.
  • You may not receive any GST cheques during your Bankruptcy.
  • You cannot obtain any credit as an un-discharged Bankrupt
  • The Bankruptcy remains on your credit rating for 7 years as an R9

If you would like to learn more about Bankruptcy or Consumer Proposals give 4 Pillars Red Deer a call at 403-755-1757. We offer a free one hour consultation where we listen and answer your questions, go over your individual situation and provide you with your options. We work for our clients not the creditors so we always do what is best for our clients.

Book your free consultation.

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