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Is it better to offer a consumer proposal than declare bankruptcy?

I have $80k in credit card debt and would like to know if it is better to offer a proposal than declare bankruptcy, now that new limits will be taking effect? My annual income $72k and I would pay a penalty for declaring bankruptcy. I could manage a repayment in a consumer proposal. Could my bankruptcy extend beyond 9 months under new laws?

Posted from: Ontario

One Response to “Is it better to offer a consumer proposal than declare bankruptcy?”

Barton Goth – Goth & Company Inc. -Trustee in Bankruptcy said...

I always suggest to people that if possible to avoid the filing of a bankruptcy and one of the most common ways to do this is through the filing of a consumer proposal.

The major reason for this suggestion is that a bankruptcy has a significantly longer term impact on you than a proposal would. This is largely because after a bankrutpcy has been filed, even after you have re-established your credit, whenever you file an application for credit the applicaiton form is going to ask if you have ever filed a bankruptcy and legally you would have to answer this truthfully. As soon as you identify that there was a bankruptcy in your past it will be more difficult to be approved for any type of financing. OF course the impact of this will diminish with time, but it still can end up making things difficult.

As for the length of bankruptcy, under the new laws it sounds as if you can likely expect a extension of 12 months (or a 21 month total period).