As a Chatham Trustee I am frequently asked which is better a consumer proposal or bankruptcy? Generally speaking a consumer proposal is better and here are 5 reasons why:
1. The payment is fixed. A bankruptcy requires you to make payments based on your income. The more money you make, the more your pay. With a consumer proposal you pay a set amount regardless of any wages increases or bonuses.
2. You maintain control over you assets. You lose income tax refunds, GST, equity in your home, and other assets in a bankruptcy. In a consumer proposal you don’t lose your assets and can use them however you want.
3. It is better on your credit rating. A consumer proposal stays on your record for 3 years after it is paid off. That is a really great incentive to pay it off faster. A bankruptcy stays on your record for 6 years after your discharge. The longer you are in bankruptcy, the longer it is on your record.
4. You can sit back and relax with a consumer proposal. Once your creditors have accepted your proposal, in addition to attending your 2 counselling sessions, all you have to do is make your payments until the proposal is paid. Many people in bankruptcy worry about how much they have to pay and how long their bankruptcy will last if they get an increase in income.
5. A consumer proposal is not bankruptcy. Most people just don’t like the idea of bankruptcy and a consumer proposal is a great alternative for many people.
I am not saying a consumer proposal is for everyone, but if you are interested in filing a consumer proposal or just want to review your situation, you can call me at 310-PLAN, 519-351-2323 or email me.
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