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bankruptcy vrs a consumer proposal

i was wondering if you are in finacial trouble why would you choose a consumer propasal to me you might as well start with a clean slate .. i reccently went bankrupt owing 60000 in debt my bills were all up to date but the trustee recommended me to go bankrupt

Posted from: Ontario

One Response to “bankruptcy vrs a consumer proposal”

A licensed trustee said...

It can be a difficult decision. Usually a consumer proposal makes more sense if there is some reason the bankruptcy will be more difficult.

For example, if you file for bankruptcy anjd have a lot of equity in your home then you will be required to pay an amount equal to your equity to your trustee or your trustee will be required to put your house up for sale. If you file a proposal yu can take up to 5 years to make those equity payments.

If you file for bankruptcy and have higher than average income you may have very high surplus income payments and your bankruptcy may be extended beyond the normal 9 months. If you file a proposal your payments are fixed for a fixed period of time.

Something to keep in mind – your total payments in a proposal will ALWAYS be higher than your total payments in a bankruptcy. The big advantage of a proposal is that your payments are usuually fixed and run for a longer period of time.

Nationally, for every six bankruptcies that are filed there is one consumer proposal filed – in our practice for every two bankrutpcies that are filed we file a proposal. As you can see, we’re pretty big believers in proposals and they make sense far more often (in our opinion) than many people think.

At the end of the day you need to decide which options makes the most sense to you.