Experts in debt consolidation, Consumer Proposals and personal bankruptcy – Sands & Associates’ BC Licensed Insolvency Trustees answer your questions about how to pay off debt:
Q: What are the advantages to filing a Consumer Proposal, as opposed to filing a personal bankruptcy in BC?
A: Even though a Consumer Proposal is a legal debt management tool that has been around for a long time, many Canadians are surprised to find out that filing a Consumer Proposal can achieve the same financial fresh start as if you had filed for bankruptcy.
Consumer Proposals are a specialized type of legal debt consolidation that can be used to drastically cut debt, and settle all debts in full – with no added interest or fees. Used to settle virtually all debts, including government debts like income taxes and student loans, Consumer Proposal settlement terms are tailored to each person, which can make them a great option for many people.
Depending on your situation, you may find a Consumer Proposal a better choice than personal bankruptcy because:
- Payment terms under a Consumer Proposal are more flexible
- By law, bankruptcy payments are calculated based on household income
- A Consumer Proposal can be paid in full at any time, without penalty
- There is no ‘minimum term’ required of a Consumer Proposal. A Consumer Proposal could even be for a single, lump-sum payment.
- You can retain assets that might be available to creditors in a bankruptcy
- Most people keep all their assets in a personal bankruptcy, but sometimes a person may hold an asset worth more than BC exemption allowances
- A Consumer Proposal stays on credit history for three years following completion (or six years after your Consumer Proposal starts, whichever is sooner)
- Credit history reflects a personal bankruptcy for six years after completion
- Tools to rebuild credit history are provided as part of the Consumer Proposal AND personal bankruptcy processes
- You may hold a professional accreditation that would not allow you to file a personal bankruptcy
- You can continue to be a director of a limited company after filing a Consumer Proposal
- While you can be self-employed during bankruptcy, a bankrupt individual may not be the director of an incorporated company
- You may find bankruptcy unacceptable due to personal reasons
There are many factors to consider when evaluating which is the best option to get out of debt. A Licensed Insolvency Trustee can help you explore all your options to become debt-free during a free, one-hour consultation. Book your debt consultation in one of our local BC offices today!