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If you have debt problems you also have options. A Consumer Proposal is "an offer to pay creditors a percentage of what is owed to them or extend the time you have to pay off the debts, or both" and, for some people, it can be a much better and more manageable solution than bankruptcy to resolve your debts, particularly if: You want to pay your creditors more than they would get in a bankruptcy. You have high income and could not manage the surplus income payment required in a bankruptcy. You have equity in assets that would take too long to pay within a bankruptcy. You have been bankrupt previously. You want to take advantage of a potentially shorter impact on your credit score. Fair and Reasonable You can be as creative as you want in determining the terms of a settlement put forth in a Consumer Proposal as long as it is fair and reasonable and you can get more than 50% of your unsecured creditors (by dollar-value of claims) to accept it. As long as you get over this 50% threshold, it will be binding on all unsecured creditors whether they like it or not. That sounds harsh but it's why this method works for some. Most consumer proposals are structured as monthly payments over time at less than full payout. Generally, a consumer proposal should provide a higher return or recovery to the creditors than they would obtain in bankruptcy or there is no incentive for your creditors to vote in favour of it. Once the total amount of the settlement is determined and approved, you can pay it out early if you are able to do so and this would accelerate rebuilding your credit. Also, the fact that you filed a Consumer Proposal will stay on your credit bureau report for 3 years after you have completed all of the terms of your Proposal, which is a shorter period than with bankruptcy. How a Consumer Proposal Works In Canada In order to qualify to file a Consumer Proposal, you must have debts of less than $250,000, excluding the mortgage on your principal residence. If you are over this limit, there is another form of proposal that can be filed. When we review your individual situation, we will consider whether or not a Consumer Proposal (or other forms of proposal) makes sense for you and review the pros and cons of a proposal as compared to bankruptcy and other non-legislated options. The Government of Canada provides a great explanation of how Consumer Proposals work here. A Consumer Proposal is a formal, legally binding process that is administered by a Licensed Insolvency Trustee (LIT). Once you understand how this method works, an LIT can look at your personal situation and help you decide if this gentler method of dealing with your debts can work for you.

Bankruptcy is usually the last choice for most individuals. It is good that this process is available because, without it, there might be no relief from the stress of unmanageable debt. Personal bankruptcy provides a financial reset when other options are not practical. Even if you don't want to use bankruptcy to resolve your situation, you should still understand how it works. Don't ignore the option just because of the "B" word. When assessing an individual's financial situation, we review all relevant facts about assets, liabilities, income, family situation, the cause of financial difficulty and outlook for the future. These are all considerations in determining what options are practically available so that you can choose the one that is best suited to you. Will I Have to Give Up My Assets? In most cases, you do not have to give up any assets (unless you want to) if you go through bankruptcy. If there is equity in assets, you will have to pay the equity with the trustee. If your income is above a certain threshold, you will have to make payments based on your income level. How your assets will be dealt with and how much you will have to pay will be reviewed with you before you file for bankruptcy so you understand exactly how bankruptcy would work for you. Counselling and Support For a Better Future The bankruptcy process also provides individuals with two (2) mandatory counselling sessions to help you understand how you got into financial difficulty, improve your basic budgeting skills and provide you with information on understanding and starting to re-build your credit. Sometimes, bankruptcy can actually be the most efficient way to get back on your financial feet and start to rebuild your credit. Try not to be afraid of this or any other option. Whether bankruptcy or another method is best for dealing with your debt, the goal for everyone involved is to give you a new beginning and a better future!